FTX Teams Up with Galaxy to Strategically Manage Crypto Holdings Amid Bankruptcy

cryptonews.com:

Now-defunct crypto exchange FTX has hired crypto firm Galaxy to handle its cryptocurrency holdings through selling, staking, and hedging.

Led by crypto billionaire Mike Novogratz, Galaxy will provide advisory services to FTX with the goal of limiting its exposure to adverse price movements, the company said in court filings submitted late on Wednesday.

After its high-profile collapse in November of last year, FTX aims to reimburse creditors in traditional fiat currency rather than Bitcoin (BTC) or Ethereum (ETH). 

However, the exchange intends to conduct cautious trading to prevent any significant devaluation of its crypto assets, which are valued at over $3 billion. 

"Hedging Bitcoin and Ether will allow FTX to limit potential downside risk prior to the sale of such assets. Staking certain digital assets will generate low-risk returns, benefiting the estates and ultimately the creditors," FTX lawyers explained in the filing.

FTX's strategy includes earning interest on its crypto holdings to be able to provide further value to customers still awaiting repayment.

The company, now under the leadership of restructuring expert John J. Ray III, fears that a mass sell-off would lead to a steep price drop, potentially benefiting short sellers and other market participants. 

To mitigate this risk, FTX seeks guidance from market experts, who may suggest implementing weekly sales limits, among other strategies.

“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 document said.

Galaxy Digital, part of Mike Novogratz's crypto conglomerate, disclosed earlier that it had significant