Galaxy Asset Mgmt Secures FTX Crypto Sale Bid; Weekly Cap Set at $50M
Key Takeaways
Galaxy Asset Management winning the bid.
The court-approved sale of FTX's crypto assets.
The capped sale of $50 million per week.
Jeff Dorman, CFA and CIO of Arca, shares updates regarding the court-approved sale of FTX's crypto assets. Contrary to rising concerns, Dorman sheds light on the meticulous and strategic approach to the asset sales.
Galaxy's Role and Regulations
Galaxy Asset Management, distinct from its trading desk, emerged victorious in its bid for the crypto assets. They have been mandated to function as fiduciaries, implying sales must be gradual and opportunistic. Notably, court documents restrict sales to a maximum of $50 million per week. Moreover, sales necessitate a written notice prior to their execution, while hedging remains at the discretion of the investment manager, presumably Galaxy.
Market Sentiment and Realities
Galaxy's win has spurred massive reverse inquiries, ranging from legitimate funds to mere fishing expeditions. However, over-the-counter (OTC) sales are expected to dominate the buying process, reducing the likelihood of extensive selling on exchanges. Contrary to some speculations, Galaxy is unlikely to impulsively sell $3 billion in futures. Dorman asserts that the objective is to outperform a static portfolio, rather than converting the estate into a L/S fund.
Legal Constraints and Planning
It's imperative to understand that Galaxy can't «front-run» the sales for internal profit, as such a move would be illegal. Their asset management business remains insulated from their prop desks & Novgratz's PA. As Dorman emphasized, this isn't a hasty plan but a result of prolonged collaboration with courts.
Bankruptcy and Sales Strategy
Bankruptcies,
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