FTX wants to hire Galaxy to manage its crypto.
The crypto exchange’s lawyers asked the court to authorize an Investment Services Agreement between FTX and Galaxy which would allow Galaxy to stake, hedge and sell FTX’s crypto.
FTX’s debtors claimed that Galaxy “proactively mitigating the risk of these volatile markets will best protect the value of the Debtors’ Digital Assets, thereby maximizing the return to creditors and promoting an equitable distribution of funds in a potential plan of reorganization.”
FTX filed for bankruptcy in 2022 after Binance pulled out of a buy-out deal for the exchange.
Further, FTX believes that Mike Novogratz’s Galaxy “expertise will be crucial in assessing the timing, trading venues and counterparties of potential transactions.”
According to court documents filed Wednesday, Galaxy will look to sell the assets for cash when it helps to limit market volatility exposure.
The document also submitted guidelines for sales, which include a weekly limit of $100 million, with the caveat that the court may increase the limit to $200 million, depending on the circumstances. The Debtors, if they decide to pursue sales of FTX (FTT), ether (ETH) or bitcoin (BTC), are required to provide 10 days’ notice.
Galaxy will hedge BTC and ETH, which “will provide a means to lessen the Debtors’ exposure to adverse price movements in Bitcoin and Ether prior to their sale.”
Through the contract, Galaxy would also be allowed to stake crypto.
According to the court filing, FTX debtors and Galaxy would be “authorized to utilize staking options available through their qualified custodians using their respective private validators if the Debtors determine in the reasonable exercise of their business judgment that such activities are in the best interests of their estates.”
“Staking assets into the proof-of-stake system is a way to earn passive interest on certain Digital Assets that would otherwise remain idle,” the documents continued.
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