From Bankruptcy to Strategy: FTX Partners with Galaxy to Maximize Value for Creditors

<p>The bankrupt cryptocurrency exchange FTX has turned to
Mike Novogratz-owned Galaxy for guidance and expertise on how to optimize the value of its
substantial crypto holdings. FTX is planning to delve into crypto staking,
hedging, and sale of its crypto assets valued at USD $3 billion.</p><p>According to a court
filing made yesterday (Wednesday), the exchange is faced with the challenge of
returning funds to creditors in fiat currency rather than the volatile
cryptocurrencies such as Bitcoin (BTC) and Ether (ETH). The company aims to tap
into Galaxy's experience, especially through its subsidiary, Galaxy Digital.</p><p>"Generally, the
investment guidelines will provide for sales of certain debtors' digital assets
over time and for the hedging of debtors' Bitcoin and Ether prior to the sale," FTX's debtors stated. "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."</p><p>Value Maximization for FTX's Customers</p><p>FTX's strategy is not
solely focused on <a href="https://www.financemagnates.com/terms/r/risk-management/">risk management</a>. The exchange is also venturing into staking
certain digital assets, a step that reportedly has the potential to generate
passive yield. Additionally, the exchange is exploring the concept of
controlled sales through weekly limits. According to the company, the approach
aims to prevent a drastic drop in the prices of crypto assets that could potentially exploit short
sellers.</p><p>The aftermath of the
collapse of FTX continues to be marked by turmoil. In a recent report by <a href="https://www.financemagnates.com/cryptocurrency/ftxs-debtors-battle-for-asset-control-amid-restructuring-plans/" target="_blank" rel="follow">Finance
Magnates</a>, the exchange's
debtors and the Official Committee of Unsecured Creditors (UCC) clashed in a <a href="https://www.financemagnates.com/cryptocurrency/ftxs-debtors-battle-for-asset-control-amid-restructuring-plans/" target="_blank" rel="follow">tussle
to control the company's assets</a>.
This disagreement comes at a time when FTX is strategizing the possibility of
restarting its operations outside the US.</p><p>At the center of the
dispute lies a recommendation by the UCC to invest a substantial amount of USD
$2.6 billion from FTX's cash reserves into short-term Treasuries. However, the
suggestion has been met with strong opposition from FTX's debtors, who argue
that such a move could impede the <a href="https://www.financemagnates.com/terms/e/exchange/">exchange</a>'s plans to relaunch its operations.</p><p>Diverging Perspectives
on Asset Allocation</p><p>A week ago, FTX and
equally insolvent digital asset lender Genesis <a href="https://www.financemagnates.com/cryptocurrency/ftx-softens-4b-demand-strikes-175m-settlement-with-genesis/" target="_blank">entered
into an agreement</a> to
settle a dispute involving USD $4 billion that FTX had initially sought. The
agreement entails Genesis making a payment of USD $175 million to Alameda
Research, an affiliated crypto trading firm of FTX, Finance Magnates reported.
The settlement had been reached 'in principle' in July.</p><p>Meanwhile, Sam
Bankman-Fried, the former FTX CEO and previously a crypto billionaire, <a href="https://www.financemagnates.com/cryptocurrency/sam-bankman-fried-pleads-not-guilty-to-new-indictment/" target="_blank">pleaded
not guilty</a> in response
to an updated indictment brought against him by the US prosecutors. He had
previously pleaded not guilty in January, contesting eight criminal charges,
including wire and securities fraud.</p>

This article was written by Jared Kirui at www.financemagnates.com.