Problematic crypto exchange FTX hires a leading crypto asset management company to manage the recovered digital assets.
In a new court fileThe bankrupt crypto exchange is seeking permission from billionaire Mike Novogratz’s Galaxy Digital to take over management of the recovered virtual currency as part of its restructuring process.
“The debtors request permission from FTX Trading Ltd. to enter into an investment services agreement with Galaxy Digital Capital Management and to perform its obligations thereunder.
The debtors have selected Galaxy Asset Management as their investment advisor based on their sophistication and qualifications, which are set out in more detail in the Investment Services Agreement Motion and the Kurz Declaration (as defined in the Investment Services Agreement Motion)…
In addition, the Debtors have determined that the proposed fee structure of the Investment Services Agreement appropriately reflects the nature of the services to be provided by Galaxy Asset Management and contains reasonable terms.”
According to the document, FTX itself cannot sell the recovered cryptocurrencies on a crypto exchange, as doing so could pose the risk of a supply shock, which could hurt digital asset prices.
“If the debtors attempted to sell large holdings of digital assets directly on an exchange, the debtors would risk ‘flooding the market’ and depressing the value of such digital assets.”
FTX first filed for bankruptcy in November 2022 after halting customer withdrawals. Its founder and former CEO, Sam Bankman-Fried, has been accused of mishandling billions of dollars in customer funds and defrauding investors. If convicted, he risks years behind bars.
In June, FTX recovered $7 billion in crypto assets, though reports at the time indicated that the crypto exchange owes its clients about $8.7 billion.
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