Bankrupt crypto exchange FTX wants Mike Novogratz’s Galaxy Group to step in as an advisor and assist them in selling, hedging, and staking its crypto assets. The firm is looking to return funds to creditors in fiat instead of crypto. Trading its $3 billion bag of assets cautiously could help it steer clear of losses. With respect to hedging and staking, the official court filing noted,
“Hedging of Bitcoin and Ether—two digital assets for which there is a liquid hedging market—will provide a means to lessen the Debtors’ exposure to adverse price movements in Bitcoin and Ether prior to their sale. Additionally, the Debtors will stake certain of their Digital Assets in order to generate passive yield.”
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Novogratz’s Galaxy is ‘Well Qualified’: FTX Lawyers
Selling all the assets at once could trigger a price drop. To avoid such a scenario, the company, currently being run by John J. Ray III, wants an expert to guide it and help it take precautionary measures, like establishing a sales cap, etc. Thus, to mitigate risks, FTX is seeking authorization to sell its assets via an investment adviser registered with the SEC. Elaborating on why Mike Novogratz’s Galaxy is right for the role, FTX lawyers contended in another filing,
“The Debtors selected Galaxy Asset Management, in consultation with the Committee and after consideration of other potential investment advisers, because they believe that Galaxy Asset Management is well-qualified and able to provide digital asset management and trading services in a cost-effective, efficient, and timely manner.”
The lawyers further asserted that Galaxy has “extensive experience” in areas relevant to crypto management and trading. With FTX trying to make amends to investors under the leadership of John J. Ray III, the company’s founder, Sam Bankman-Fried, continues to plead not guilty to the fraud allegations against him.
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