Galaxy Digital’s FTX Success Sparks Hunt for New Targets

Galaxy Digital’s FTX Success

TL;DR

  • Cryptocurrency financial service company Galaxy Digital targets other crypto bankruptcy asset sales after a successful FTX deal.
  • The FTX deal has had positive developments on Galaxy after grappling with the aftermath of a previous crypto market crash.

Galaxy Hunting for More Crypto Bankruptcy Asset Sales

Galaxy Digital, the cryptocurrency financial services firm, is hunting for more asset sales from bankrupt digital companies.

Galaxy Digital targets more crypto bankruptcy asset sales.
Logo of Digital Galaxy | Source: Galaxy Digital

The news came after it secured a deal to sell Bitcoin and Ether, owned by the crypto exchange FTX, on behalf of the estate’s management.

According to a Financial Times report, this deal from Aug. 2023 has increased Galaxy’s funds under the management.

It tripled the company’s figures from $1.7 billion the previous year to $5.3 billion.

Galaxy Digital was chosen by administrators of the collapse FTX in August to manage its assets. The company was mandated to sell, stake, and hedge FTX’s Bitcoin (BTC) and Ethereum (ETH) coins.

Moreover, Galaxy was also used to manage FTX’s holdings of Grayscale’s Bitcoin Trust.

Steve Kurz, the head of global asset management at Galaxy, admitted the company’s interest in acquiring assets for other bankrupt crypto companies.

He reiterated that FTX’s widespread venture capital portfolio of real estate and technology companies is a potential target.

We have a crypto venture team investing off our balance sheet for five years. The record that we have on that side of our asset management business means we’d be a good candidate for something like that.

Steve Kurz, the global head of asset management at Galaxy, said.

FTX holds a stake in Anthropic, an artificial intelligence start-up. Recently, this investment achieved a valuation of nearly $5 billion in the latest funding round.

Galaxy’s Grappling Losses After Crypto Market Crash

The deal has positively developed the company under the leadership of Mike Novogratz. Galaxy Digital has been grappling with the aftermath of the previous year’s crypto market crash.

Galaxy Digital CEO Mike Novogratz helps the company recover from the aftermath of crypto market crash.
Galaxy Digital CEO Mike Novogratz | Source: Bloomberg

It recorded a $94M loss in the third quarter of this year. Galaxy’s asset management arm has been selling FTX’s token on the open market.

The move attempts to help the collapsed FTX recover the value of assets and repay its creditors.

In a court ruling on Sept 13, 2023, FTX received approval to liquidate its assets. It was to sell its assets in lots of $100 million per week.

The verdict came with the condition that the sales could not disrupt market prices or alert other traders.

Is Galaxy Positioned to Win Other Lucrative Deals?

After successfully handling the FTX mandate, Galaxy Digital has positioned itself to win future lucrative mandates. 

It is taking steps to move its stock market listing from the Toronto Stock Exchange to New York’s Nasdaq. The company manages funds covering active, passive, and venture capital strategies.

Recently, the company partnered with Dutch market maker Flow Traders. And also the German asset manager DWS to create a euro-denominated stablecoin.

The move allows Galaxy to join other major institutions in creating their tokens.

In addition, Galaxy Digital is also entering the competition for the highly anticipated spot bitcoin exchange-traded fund (ETF).

The firm collaborates with the asset manager Invesco and exchange operator Cboe Global Markets to launch the ETF.

Galaxy has been in continuous dialogue with the U.S. SEC and is optimistic that it will approve the Bitcoin ETF.

Will Galaxy Digital win other lucrative mandates?