FTX Seeks to Appoint Novogratz’s Galaxy to Manage Giant Crypto Hoard
Bloomberg) — The administrators of FTX are seeking to appoint the asset management arm of billionaire Michael Novogratz’s Galaxy Digital Holdings Ltd. to help oversee the bankrupt exchange’s giant pile of digital tokens.
FTX has developed “a comprehensive management and monetization” plan that “will reduce exposure to market volatility and prepare for potential dollarized distribution to creditors,” it said in court filings late on Wednesday.
The guidelines allow for the sale and staking of certain tokens, as well as the hedging of Bitcoin and Ether exposure to mitigate risks from market volatility. Staking involves earning rewards by pledging tokens to help run a blockchain.
FTX is looking for court permission to sign an investment services agreement with Galaxy Asset Management as part of the plan. The administrators said they chose Galaxy in consultation with the official committee of unsecured creditors after considering other potential investment advisers.
Earlier this month, FTX’s new management team under Chief Restructuring Officer John J. Ray III hit out at traders and market makers on the creditor panel, which had claimed the estate was missing out on better returns from its vast cash and token holdings.
In that retort, FTX’s representatives had said that the panel appeared inclined “to pursue an unrepresentative plan that vests control of the debtors’ billions of dollars in liquid assets in the hands of unrestricted crypto traders and market makers.”
Proactive risk management will best protect the value of crypto holdings and therefore help to achieve an equitable distribution of funds in a potential reorganization of the company, according to the latest filings.
Sam Bankman-Fried’s FTX empire fell apart last November in what prosecutors say is one of the largest financial frauds in US history. The FTX.com exchange owed customers approximately $8.7 billion when it filed for bankruptcy and about $7 billion in liquid assets have been recovered so far.