According to a court filing posted to FTX’s claims agent website on August 23, FTX has filed a motion in chapter court seeking authorisation to hire Galaxy Digital Capital Administration LP (“Galaxy”) as a financing supervisor.
For FTX, Galaxy is the funding supervisor.
As stated in the submission, FTX is seeking to work with Galaxy to provide financial management services for specific digital properties owned by FTX.
Under the proposed agreement, Galaxy would manage and trade these assets in order to convert them into fiat currency or stablecoins. Additionally, Galaxy would protect FTX from exposure to riskier cryptocurrencies like Bitcoin and Ether.
In exchange, Galaxy would get a monthly administration fee made up of two components: a hedging price based on the typical net asset value of the property being hedged and a liquidation price depending on the total proceeds from the property that is liquidated.
According to court documents, FTX argues that hiring a knowledgeable outside investment manager like Galaxy is helpful since Galaxy has the expertise to market key cryptocurrency holdings without oversaturating the market. To avoid accidentally moving costs and signalling FTX’s intentions, Galaxy can even execute trades in a secret manner.
The planned engagement seeks to monetize FTX’s sizable cryptocurrency holdings in order to support its reorganisation efforts.
The final decision, however, rests with the chapter court, which must review the case and determine whether or not keeping Galaxy on as an investment manager is in FTX and its investors’ best interests.
Request for property sale.
On August 23, the FTX debtors filed a second motion asking the court’s permission to determine how to manage and sell some of their significant holdings of digital assets, perhaps in connection with the Galaxy filing.
According to court documents, FTX is asking permission to hire a financial adviser to assist with the long-term promotion of specific currencies and tokens. The suggested guidelines would allow FTX to market digital assets worth up to $100 million per week, with the option to immediately raise the cap to $200 million.
According to FTX, selling digital assets through a qualified investment manager can help maximize sale revenues while lowering volatility exposure. Additionally, the filing requests that the court authorize FTX’s entry into suitable hedging contracts on cryptocurrencies like Bitcoin and Ethereum.
Additionally, FTX is looking for approval to stake some idle crypto assets in order to create passive revenue. The debtors contend that these actions represent a wise course for business judgment that can benefit collectors by reducing market threat.
However, after notice and a hearing, the chapter court must still approve FTX‘s suggestions for the sale of its digital assets and its sought authority.