2023-8-25 11:38 |
According to court documents filed late on Wednesday night, bankrupt cryptocurrency exchange FTX is looking to hire Mike Novogratz’s Galaxy as an advisor to help it sell, stake, and hedge its massive crypto holdings.
FTX, which went down in November of last year, wants to pay creditors in fiat money (US dollars) rather than Bitcoin (BTC) or Ether (ETH), but it is hoping that prudent trading will prevent the value of its nearly $3 billion in crypto holdings from being negatively impacted.
FTX hoping to increase its crypto holdingIn order to increase the shares it can give to creditors who are still waiting for their money back, FTX is betting on increasing its crypto holding by earning interest on its crypto pile.
The crypto exchange, which is currently led by restructuring expert John J. Ray III, is concerned that selling everything at once would drive down the price, benefiting short sellers and other market participants. To determine the most effective way to avoid that, such as through weekly sales limitations, it is turning to market specialists like Mike Novogratz’s Galaxy.
The filing by FTX lawyers stated that “Hedging bitcoin and ether will allow the Debtors [FTX] to limit potential downside risk prior to the sale of such bitcoin or ether. Staking certain digital assets… will inure to the benefit of the estates — and, ultimately, creditors — by generating low-risk returns on their otherwise idle digital assets.”
Referring to part of Mike Novogratz’s crypto conglomerate, the court filing said:
“Galaxy Asset Management has extensive experience in areas relevant to digital asset management and trading, including with respect to the types of transactions and investment objectives contemplated.”
The new court filing has also detailed the conflict of interest seeing that Galaxy Digital (GLXY), another of Mike Novogratz’s empire, had tens of millions held up in FTX at the time the crypto exchange filed for bankruptcy.
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