Cryptocurrency exchange FTX, which filed for bankruptcy last November, is seeking to enlist the help of Galaxy Digital, led by Mike Novogratz, to convert its $3.4 billion in crypto assets into cash. FTX aims to repay its creditors in cash instead of cryptocurrency and believes that hedging and staking arrangements facilitated by Galaxy Digital will minimize the loss of value and maximize the amount that can be paid back. The bankruptcy court must approve the request to hire Galaxy for these services.
While some bankrupt crypto companies have chosen to distribute payments in cryptocurrency, FTX is opting for cash. FTX would pay Galaxy a monthly management fee as well as reimbursements for expenses and costs incurred. CoinDesk reported that FTX is spending $1.5 million daily on legal fees. Lawyers for FTX highlighted Galaxy’s experience in digital asset management and trading, making it the best fit to advise on hedging and staking activities.
In the meantime, former FTX CEO Sam Bankman-Fried has been in jail for two weeks after his bail was revoked. His lawyers stated that his diet is not being accommodated in prison, and he is subsisting on bread and water. Bankman-Fried’s trial is scheduled for October.
