FTX wants to pay back creditors in cold hard cash, in lieu of crypto, and the ailing firm has asked Mike Novogratz’s Galaxy Digital to help get it done, according to a late Wednesday court filing.
FTX, which declared bankruptcy in November, said in an April filing that it held $3.4 billion in crypto, but it previously made clear that it wants to turn those assets into cash before distributing them. The Wednesday filing said the company, led by caretaker CEO John J. Ray III, wants to enlist Galaxy to help it “enter into hedging and staking arrangements,” which it believes will help it limit the assets’ loss of value and maximize what can be paid back to creditors. The request to hire Galaxy must be approved by the bankruptcy court.
Still, other bankrupt crypto companies, like the crypto lender Celsius, have chosen to distribute payments in crypto rather than cash.
For its services, FTX would pay Galaxy a monthly management fee, as well as reimbursements for out-of-pocket costs and expenses, including commissions, interest, and custodial and brokerage fees. On top of this, FTX is reportedly spending $1.5 million daily on legal fees, CoinDesk reported.
Lawyers for FTX wrote in the court filing that Galaxy is the best fit to advise on hedging and staking activities because it has significant experience in digital asset management and trading.
Meanwhile, former FTX CEO Sam Bankman-Fried has spent just under two weeks in jail after his bail was revoked on Aug. 11. SBF’s lawyers said this week that his diet is not being accommodated in prison and he is “subsisting” on bread and water. His trial is set for October.