Last Updated on 2 weeks by Ameer Hamza
Almost a year ago, FTX, one of the most popular crypto exchange platforms to ever grace the crypto scene, filed for bankruptcy. After news of the risky financial situation of its sister company, Aladema, and customers’ inability to access their funds on the exchange, FTX finally succumbed to filing for bankruptcy.
Since the announcement of its bankrupt state, few moves have been made to purchase the once billion-dollar company. Although Binance showed positive signs of purchasing its rival company, it balked out of the deal only a day after, stating that the “issues are beyond our control or ability to help.”
However, in a recent move, Galaxy Asset Management won the $50 million bid to manage the remaining crypto assets of the crypto exchange.
Events leading up to the win of Galaxy asset
FTX announced its decision to liquidate its digital asset holdings to meet the demands of its creditors. The firm still holds assets in Solana, Bitcoin, Ethereum, and various other tokens worth over $3.4 billion. It then approached the U.S. Bankruptcy Court of the Delaware district for permission to sell, stake, and hedge its remaining crypto holdings, which the court approved.
How Galaxy Digital won the bid to manage the assets
Following the court’s approval to hedge its crypto holdings, FTX appointed Galaxy Asset Management as manager for FTX crypto holdings. Galaxy Asset Management is an SEC-registered investment adviser with experience in digital assets management and trading through various investment vehicles, spanning active, passive, and venture strategies.
FTX intends to retain Galaxy Asset as its investment adviser thanks to its experience in digital asset management. With this move, Galaxy Asset can assist FTX in maximizing the value of its remaining crypto tokens.
Aside from effectively managing its token portfolio to maximize profits, several benefits are attached to this new partnership. For one, FTX can anonymously sell its holdings, mitigating market manipulation risk. In addition, under the guidance of Galaxy Asset, hedging Bitcoin and Ether will help to reduce FTX’s exposure to adverse market movements before their sale.
Galaxy Asset also intends to help stake FTX crypto holdings, a process where cryptocurrencies are lent to help validate blockchain transactions, earning interest in the process. Generally, Galaxy Asset Management will act as fiduciaries and trustees to sell gradually and profitably.
The selling process and helping FTX maximize profits will probably span many months. Galaxy Asset cannot indiscriminately sell the assets or liquidate the crypto holdings in a bid to settle creditors. The plan remains to maximize the estate and acquire profits in the management of the assets.
They have a weekly limit of $100 million in sales to prevent dumping and forced sales of the crypto assets left. However, Galaxy can ask the court for a higher block bid if there are good bids.
Bankruptcy cannot be resolved promptly, especially for a large firm like FTX. The partnership between FTX and Galaxy Asset is a strategic move to ensure an organized and profitable transition. The crypto market is still subject to high volatility, and investors are encouraged to remain cautious.