Several events in FTX’s bankruptcy proceedings continue to unravel as the crypto exchange seeks to settle its creditors and possibly restart. The latest of these is that the company has moved to protect its remaining assets with the help of Galaxy Digital.
FTX Seeks To Protect Crypto Assets
According to a filing dated August 24, crypto exchange FTX has filed a motion seeking the court to authorize its Investment Services Agreement with Galaxy Digital.
The motion, tagged the “Coin Management and Monetization Motion,” noted that the Debtor’s board of directors had selected Galaxy Asset Management to provide investment manager services to the digital assets that form an account of the company.
This forms part of the company’s plans to hedge against the volatility of its digital assets while it finalizes its plan to repay its creditors and customers.
It also aims to profit from this venture, probably to shore up its liquidity and further provide a means to offset its debts completely.
However, this hedging and staking arrangement must be done under the “court-approved management and monetization guidelines,” which is why it has filed this motion.
Terms Of The Agreement
If the court approves the Investment Services Agreement, Galaxy Digital will provide certain services to the bankrupt crypto exchange, including management of its assets.
The investment manager will use FTX’s account to trade “in any and all financial instruments,” including digital assets, futures contracts, commodities, and other similar investment funds.
Additionally, Galaxy Digital will provide certain “support services” to the account, such as administrative and accounting services. It will select brokers and dealers, banks, and other trading intermediaries.
Per the agreement, it will also enter and execute agreements, make payments on behalf of the account, and in furtherance of its duties as an investment manager.
One notable highlight in the agreement is the “Best Execution” responsibility, which means Galaxy Digital must “seek and obtain the most favorable terms reasonably available” when executing a trade on behalf of the account.
This is in addition to the fiduciary duty placed on the investment manager to exercise due care and act in the client’s best interest. Meanwhile, FTX’s obligation will be to pay Galaxy Digital the management fee and any other expenses stipulated under the agreement.
It is worth mentioning that this agreement doesn’t become valid until the court enters a monetization and approval order. Whereby the court doesn’t approve the agreement in “all material respects,” Galaxy Digital has the right to decline to provide its services to FTX.