Bankrupt cryptocurrency exchange FTX is seeking to capitalize on key crypto assets by forming a strategic partnership with Galaxy Digital, the investment advisory arm of Mike Novogratz’s crypto conglomerate, to save its wealth after its dramatic collapse last November. According to court filings filed Wednesday evening, FTX aims to sell, stake and protect comprehensive crypto assets under Galaxy’s guidance as it aims to return funds to creditors while maintaining the value of more than $3 billion in cryptoassets. Here are the details…
FTX will start selling various cryptocurrencies
FTX’s lawyers outlined their plans to use strategic trading and hedging techniques to minimize potential downside risks prior to the sale of key Bitcoin (BTC) and Ethereum (ETH) assets. By holding positions and staking certain crypto assets, FTX aims to generate low-risk returns from idle crypto assets, benefiting properties and creditors. The company aims to grow the interest earned from its crypto assets and include it in stock that can be distributed to customers still awaiting a refund.
Concerns of the crypto exchange about a quick sell-off causing prices to drop led them to consider alternative strategies, including imposing weekly sell limits to maintain market stability. Galaxy Asset Management’s extensive experience in digital asset management and trading makes them a sought-after advisor in this complex process. The involvement of Galaxy Digital, which previously held a significant stake in FTX, ensures that measures are taken to avoid conflicts of interest and put FTX’s interests first.
FTX is on the way to recovery
FTX’s journey to recovery is fraught with legal challenges. The Delaware bankruptcy court is required to approve the exchange’s proposals, adding an additional layer of complexity to restructuring efforts. This comes after it was revealed that FTX’s legal fees per day were a staggering $1.5 million while executing the liquidation process. Sam Bankman-Fried, former CEO of FTX, has also been involved in legal proceedings where he faces charges of fraud, embezzlement of client funds and money laundering.
Bankman-Fried’s defense team blames the advice of advisors and in-house legal counsel, including Fenwick & West LLP, and argues that their endorsements led to decisions that contributed to FTX’s downfall. But this defense strategy risks violating attorney-client privilege and creating legal complications. As the legal battle intensifies and the October hearing date approaches, the future of both FTX and Sam Bankman-Fried remains uncertain. The lawsuit not only serves as a testament to the fate of the former CEO, but also serves as a testament to the complexities and challenges the cryptocurrency industry faces as it matures and navigates uncharted legal waters.
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