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Galaxy Digital Eyes More Crypto Bankruptcy Asset Sales Following FTX Deal

The firm's assets under management has tripled from $1.7 billion last year, to $5.3 billion currently.

Mike Novogratz (Image: Midjourney/Blockhead)

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In a strategic move to capitalize on the resurgence of the crypto market, Galaxy Digital, led by billionaire Mike Novogratz, is actively pursuing additional asset sales from bankrupt digital assets companies, according to a recent report in the Financial Times. This initiative follows a successful deal to handle the sale of tokens held by FTX, which significantly bolstered Galaxy Digital's assets under management.

Tripling Funds Under Management

Galaxy Digital was selected by administrators of the defunct crypto exchange FTX in August to oversee the sale, hedging, and staking of FTX's bitcoin and ether coins, as well as its holdings in Grayscale's bitcoin trust. This partnership has resulted in a remarkable increase in Galaxy Digital's assets under management, soaring from $1.7 billion a year ago to an impressive $5.3 billion, according to the company's statement shared with FT.

This surge in assets comes as a welcome development for Galaxy Digital, which ranks among the world's largest crypto financial services groups, with extensive involvement in trading and investment banking. The firm faced considerable challenges in recovering from last year's crypto market crash, recording a $94 million loss in the third quarter of this year.

Galaxy's asset management division has been methodically offloading FTX's tokens onto the open market. This strategy aims to assist the failed exchange's administrators in recuperating asset value to settle creditors. A U.S. court decision in September allowed FTX asset sales in increments of $100 million per week, emphasizing the importance of preserving market stability and avoiding leaks of sensitive information to other traders.

Ambitious Expansion Plans

Steve Kurz, the global head of asset management at Galaxy, expressed the firm's interest in acquiring the assets of other bankrupt companies. Notably, among the potential targets is FTX's substantial venture capital portfolio, encompassing real estate and technology companies, including a stake in AI startup Anthropic.

Galaxy Digital, in pursuit of expanding its influence, is actively working on relocating its stock market listing from the Toronto Stock Exchange to Nasdaq. The firm manages a diverse array of funds spanning passive, active, and venture capital strategies. Recently, Galaxy joined forces with Dutch market maker Flow Traders and German asset manager DWS to introduce a euro-denominated stablecoin, aligning with a growing trend among major institutions.

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