Bankrupt FTX to pay creditors in dollars as it plans to liquidate $3 billion in crypto


  • Sam Bankman-Fried’s FTX creditors could soon see their lost funds returned in US Dollars.
  • The crypto exchange approached Michael Novogratz’s Galaxy Digital to liquidate crypto holdings worth $3 billion. .
  • According to the court filing, the exchange selected Galaxy Asset Management for its trading and asset management services.

Samuel Bankman-Fried’s bankrupt FTX exchange is keen on staking, trading and hedging its Bitcoin and Ethereum holdings with the aim of repaying its customers in US dollars. The exchange has selected Michael Novogratz’s Galaxy Digital to help it liquidate $3 billion in crypto, according to a court filing from late Wednesday. 

Also read: XRP price battles decline to $0.50 as Ripple prepares for trial in Q2 2024

FTX exchange creditors to be paid back in dollars

Samuel Bankman-Fried’s (SBF) exchange, FTX, collapsed in November 2022. The exchange is exploring options to return creditors’ funds in fiat currencies rather than crypto. FTX current administrators hope that staking and careful trading can help the platform liquidate $3 billion in crypto holdings to repay customers.

FTX exchange’s lawyers said in a court filing that hedging Bitcoin and Ether will allow the platform to limit downside risks when liquidating its crypto assets. The exchange is aiming to generate low risk returns on BTC, ETH holdings.

John J Ray III, the CEO of the exchange, considers that selling $3 billion in crypto in one go would result in a significant decline in asset prices. Galaxy Digital, a part of the Galaxy Asset Management ecosystem, has funds tied in the bankrupt platform. The firm is likely to act in FTX’s best interests to recover creditor funds.

Galaxy Asset Management will likely help FTX determine the type of transactions and investments that help preserve the value of their crypto holdings without influencing asset prices for market participants.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.


Like this article? Help us with some feedback by answering this survey:



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Vitalik Buterin slams controversial gambling project ZKasino following scam allegations

Vitalik Buterin slams controversial gambling project ZKasino following scam allegations

Ethereum founder Vitalik Buterin took to Warpcaster, a new type of social network, to condemn ZKasino, a decentralized gambling platform based on Layer 2 Ethereum protocol zkSync.

More Cryptocurrencies News

Starknet jumps 2% after notice inviting specific groups to claim STRK airdrop

Starknet jumps 2% after notice inviting specific groups to claim STRK airdrop

Starknet Foundation addressed the groups within the STRK community that were unable to receive the token’s airdrop during the first round. The Layer 2 chain organized an airdrop event in February.

More Cryptocurrencies News

XRP price capped at $0.55 despite retail holdings nearing all-time highs

XRP price capped at $0.55 despite retail holdings nearing all-time highs

Ripple price (XRP) failed to break resistance at $0.55 early Wednesday as traders continue to digest Ripple’s recent response to the Securities and Exchange Commission’s (SEC) allegations of illegally selling XRP as a security. 

More Ripple News

Binance founder Changpeng Zhao could face three-year jail time

Binance founder Changpeng Zhao could face three-year jail time

US prosecutors are requesting Binance founder and former CEO Changpeng Zhao (CZ) to serve a three-year jail time, according to a Reuters report published Wednesday. 

More Binance News

Bitcoin: BTC post-halving rally could be partially priced in Premium

Bitcoin: BTC post-halving rally could be partially priced in

Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days? 

Read full analysis

BTC

ETH

XRP