Galaxy Digital filed a petition to the Delaware Bankruptcy Court on August 24, seeking authorization and approval for the sale of recovered digital assets during ongoing bankruptcy proceedings. The application outlines FTX’s requests and summarizes the transfer plans for approximately $7 billion worth of crypto assets that were salvaged under the management of Galaxy Digital following the exchange’s collapse in 2022.
As stated in FTX’s preliminary statement, the aim is to facilitate the potential sale of crypto assets through Galaxy Digital. The filing emphasizes the intention to minimize exposure to volatility for cryptocurrency assets and reduce potential fiat repayments to creditors through a “comprehensive management and profit-making plan.”
FTX aims to retain Galaxy Digital as a registered investment advisor and leverage their “expertise in digital asset markets” to help maximize the value of the company’s crypto asset portfolio. The company highlighted a range of potential benefits from the partnership, including the ability to sell assets anonymously in the markets and reduce the risk of market manipulation.
FTX states that, in addition to selling various digital assets owned by Galaxy Digital in the future, it will be responsible for hedging Bitcoin and Ethereum before any potential sales. The company plans to utilize spot markets for Bitcoin and Ethereum to mitigate exposure to unexpected price fluctuations while attempting to sell crypto assets for fiat.
FTX mentions that under the guidance of Galaxy Digital, it plans to stake specific cryptocurrencies to generate passive income, offering a nod to Decentralized Finance (DeFi):
“Debtors argue that staking certain digital assets according to the staking method would provide low-risk returns from otherwise idle digital assets, benefiting the creditors.”
Galaxy Digital, the digital asset management company led by Mike Novogratz, appears ready to manage the remaining crypto assets of bankrupt cryptocurrency exchange FTX.
While bankruptcy proceedings continue, FTX recently proposed a restructuring plan that indicates the creation of a restarted offshore exchange. This plan could offer creditors the option to receive partial repayment of lost funds or participate in the restart of FTX through equity, tokens, and other benefits.