- FTX has engaged Galaxy Digital to transform its substantial crypto holdings into cash
- The defunct exchange is thought to hold over $3 billion in crypto
- Galaxy Digital will be paid $1.5 million per month for their efforts
FTX has taken a notable step towards transforming its substantial cryptocurrency holdings into liquid assets by engaging the services of Galaxy Digital to assist it. FTX holds some $3.4 billion in crypto which it has made clear it wants to liquidate to cash and redistribute to creditors, but its current bosses don’t have the expertise in the sector to ensure that it gets the right return. As a result, it has turned to Mike Novogratz’s outfit to help it safeguard the value of its assets while maximizing the returns to its creditors.
Crypto Liquidation Common
Bankruptcy proceedings where the assets at the core of proceedings aren’t in cash format are traditionally liquidated in bankruptcy proceedings, although, as we have seen in the case of Celsius, alternative arrangements can be made, as long as the creditors ultimately benefit.
In a filing on Wednesday, the company, led by caretaker CEO John J. Ray III, asked to enlist Galaxy Digital to help it “enter into hedging and staking arrangements,” believing that the company is well placed to help it limit the assets’ loss of value and maximize what can be paid back to creditors. The request to hire Galaxy Digital must be approved by the bankruptcy court, which will judge if it is in the best interest of the creditors.
$1.5 Million Per Month
The rationale for selecting Galaxy Digital as the guiding force behind these financial intricacies lies in the company’s strong track record and extensive experience in digital asset management and trading. This was emphasized in the legal documents surrounding FTX’s filing.
Galaxy Digital is set to receive a monthly management fee for its efforts, alongside coverage for various expenses such as legal fees, which reportedly accumulate to a staggering $1.5 million daily. This will no doubt further anger the official FTX creditor group which has already raised concerns about the cost of the bankruptcy, which of course comes from FTX’s remaining reserves.
