- 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.
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