Galaxy Digital on the Hunt for More Crypto Bankruptcy Assets Post-FTX Deal

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Galaxy Digital, the cryptocurrency group led by US billionaire Mike Novogratz, is seeking additional asset sales from bankrupt digital asset companies following a successful deal that involved selling coins held by FTX. 

The transaction has significantly increased Galaxy’s funds under management, tripling the figure from $1.7 billion a year ago to $5.3 billion currently, according to the company’s statement to the Financial Times.

Galaxy Digital was chosen by administrators of the collapsed crypto exchange in August to manage the sale, hedging, and staking of FTX’s Bitcoin (BTC) and Ethereum (ETH) coins, as well as its holdings of Grayscale’s Bitcoin trust.

The win has been a positive development for Galaxy, as the company has been grappling with the aftermath of last year’s crypto market crash, recording a $94 million loss in the third quarter of this year.

The asset management arm of Galaxy has been gradually selling FTX’s tokens on the open market in an effort to help the failed exchange’s administrators recover the value of assets and repay creditors. 

A US court ruling in September stipulated that FTX assets could be sold in lots of $100 million per week, with the condition that the sales should not disrupt market prices or alert other traders.

Steve Kurz, the global head of asset management at Galaxy, expressed interest in acquiring the assets of other bankrupt companies, citing FTX’s extensive venture capital portfolio of real estate and technology firms as potential targets. 

FTX’s venture portfolio includes a stake in artificial intelligence start-up Anthropic, which was valued at nearly $5 billion in a recent funding round.

Galaxy Digital Positioned to Win other Lucrative Mandates 

Galaxy Digital’s successful handling of the FTX mandate has positioned the company to win other lucrative mandates in the future, according to Andrew Bond, a senior research analyst at Rosenblatt Securities. 

Galaxy, which intends to move its stock market listing from the Toronto Stock Exchange to New York’s Nasdaq, manages a range of funds covering passive, active, and venture capital strategies. 

Recently, the company partnered with Dutch market maker Flow Traders and German asset manager DWS to launch a euro-denominated stablecoin, joining other major institutions in creating their own tokens.

Furthermore, Galaxy has entered the competition for a highly anticipated spot bitcoin exchange-traded fund (ETF) and is seeking to collaborate with asset manager Invesco and exchange operator Cboe Global Markets to launch the fund. 

The price of bitcoin has surged by approximately 150% this year, surpassing $41,000, largely due to expectations of an influx of bitcoin ETFs that would open up the asset class to Wall Street investors.

Steve Kurz acknowledged that the cryptocurrency industry in the US has faced significant challenges but highlighted a turning point this year when BlackRock filed for an ETF. 

Galaxy Digital has been engaged in frequent dialogue with the US Securities and Exchange Commission (SEC) and is optimistic about the potential approval of a bitcoin ETF. 

“The world doesn’t understand the impact that these vehicles and a bitcoin ETF will have to bitcoin and crypto over time,” added Kurz, who previously worked at Fortress Investment Group and Lehman Brothers.

Approval would mark “a real watershed moment for crypto,” he said.

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