FTX wants the court to allow up to $200 million worth of weekly crypto sales
Date: 2023-08-24 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
FTX has filed a petition with the bankruptcy court seeking permission to hire Galaxy Digital Capital Management LP (“Galaxy”) as an investment manager, according to a court filing uploaded to the FTX claims agent website on August 23.
Galaxy Investment Manager for FTX.
According to the filing, FTX is offering to engage Galaxy to provide investment management services for certain digital assets owned by FTX.
Under the proposed agreement, Galaxy will manage and exchange these assets to liquidate them in fiat currency or stablecoins. Galaxy will also hedge FTX's exposure to volatile cryptocurrencies such as Bitcoin and Ethereum.
In turn, Galaxy will receive a monthly management fee consisting of two components: a hedge fee based on the average net asset value of the hedged assets and a liquidation fee based on the total proceeds from the liquidated assets.
According to court documents, FTX believes that hiring an experienced external investment manager like Galaxy is beneficial because Galaxy has a track record of selling significant positions in crypto without flooding the market. Galaxy can also trade confidentially to prevent FTX intent signals and unintentional price changes.
If approved, Galaxy would be obligated to FTX to act in its best interests when managing digital assets. The FTX application describes Galaxy's policies and procedures to avoid conflicts of interest in fulfilling this obligation.
FTX contends that Galaxy's hiring as proposed is the proper exercise of its business decision and is seeking court approval pursuant to section 363(b) of the Bankruptcy Code. This provision allows the debtor to use the property in the estate outside the normal course of business after notice and a hearing.
The proposed engagement aims to aid FTX's restructuring efforts by monetizing its significant crypto holdings.
However, the final decision rests with the bankruptcy court, which must review the petition and determine whether keeping Galaxy as an investment manager is in the best interests of FTX and its creditors.
Application for the sale of real estate.
The debtors of FTX filed another petition on August 23, seeking court approval to set guidelines for the management and sale of some of their significant holdings of digital assets, likely related to the Galaxy filing.
According to court documents, FTX is seeking permission to engage an investment advisor to help sell certain coins and tokens over time. The proposed guidelines would allow FTX to sell up to $100 million worth of digital assets per week, with the option to temporarily increase the limit to $200 million.
FTX claims that selling digital assets through an experienced investment manager will help maximize the proceeds from the sale while reducing volatility. The statement also asks the court to approve FTX entering into hedging agreements for relevant cryptocurrencies such as Bitcoin and Ethereum.
In addition, FTX is requesting permission to list some idle crypto assets in order to generate passive income. The debtors argue that these measures represent sound business judgment that will benefit creditors by mitigating market risk.
However, FTX's digital asset sale guidelines and requested powers are still subject to Bankruptcy Court approval after notice and hearing.
