In a twist of strategy, a bankrupt FTX, notorious crypto exchange now administered by restructuring maven John J. Ray III, contemplates initiating staking and hedging sales for its hefty crypto assets – all totalling a mind-boggling $3 billion in value. A message late Wednesday sourced this news from recent court filings. It’s worth noting that FTX eyeing Mike Novogratz’s Galaxy empire as their advisory support and potentially looking to benefit from its seasoned insights.
The erstwhile bustling exchange shuttered operations last November, and having amassed a sizeable crypt-holdings, plans to return creditors remunerations in fiat currency, rather than the contentious bitcoin (BTC) or ether (ETH). According to their legal filing, FTX sees careful trading as the safest route to fend off damaging the present valuation of its marvellous crypto holdings.
In their understanding, judicious hedging of bitcoin and ether will cap any potential risk factors before their sale. Similarly, they posit that staking of select digital assets will yield low-risk returns on otherwise idle assets. Their optimism is bolstered by the assurance of potential increments through crypto-interested parties, supplementing the pay-back to clients still on the waiting list.
One conundrum FTX dreads is a sudden and substantial price drop. Rapid sell-off, they fear, might trigger a market rally, advantaging short sellers and several market players. Hence they hope for the intervention of market experts, perhaps through weekly sales limits.
To this end, FTX’s newfound camaraderie with Galaxy does not appear without rationale. The filing disclosed that Galaxy’s Asset Management, another component of Novogratz’s crypto realm, with its SEC-approved investment advisor status and significant experience in digital asset management, seems best fit for the role.
FTX seems potentially drawn towards Galaxy Digital (GLXY), another Novogratz venture, which declared once having tens of millions invested in the crypto exchange, focusing on the chain-of-interest procedures that will secure FTX’s interests.
Ironically, FTX’s April filing reported $3.4 billion worth of key, liquid crypto assets, while July reports hinted at its intention of monetizing cryptos into cash before rewarding customers. International customers might gain access to a revived exchange, unlike firms like Celsius opting for liquid cryptos such as BTC and ETH.
While FTX’s intention seems on point, it rests upon the validation by Delaware’s bankruptcy court. Anticipating steep daily legal fees of $1.5 million as it plans to fold neatly, we learn FTX founder Sam Bankman-Fried pleaded not guilty to fraud charges.
Source: Coindesk
