Aug 24, 2023

Bankrupt crypto exchange FTX is seeking to hire Mike Novogratz’s Galaxy as an advisor to help sell, stake and hedge its sizable crypto holdings, according to court filings.

Video transcript

FTX has tapped Galaxy formerly Galaxy Digital to sell stake and hedge its crypto billions. This is a major development for the bankrupt exchange as it looks to get back on its feet and also return value to its many stakeholders. Let's talk about this one. And then we got another uh little quick story that we can get to here. FTX tapping Galaxy interesting uh Galaxy uh obviously the merchant bank held by Mike Novogratz, very prominent in the space with a number of different arms, touching ventures, touching uh trading, touching all sorts of things gonna throw this to you will reading between the lines here. What do you think is going on with this headline? Yeah, I think there's like a lot of cash the FT state needs to get working for the creditors. I mean, they even talked a few weeks ago about how the F state has not moved forward with putting a lot of the treasury into us T bonds, which would make about 4 to 5%. That'd be pretty awesome for the billions that they're sitting on top of and they declined to do that because it's another risk factor, but maybe they can't take these crypto assets and give them to someone else to do staking operations or something that's more native to Cryptocurrency itself. And they can't do it right now with like the technology they have on hand because FTX itself has shut down and perhaps it never really exists in the first place, but Galaxy Digital certainly can do it. They're going to hand it off my question here is like, how much is Galaxy Digital going to charge for this? I'm sure it's not cheap. And as we'll get into for the next story here in a second, the FT X state has not held its hand from spending money from its fast track. As of right now, they're spending about $1.5 million per day. So, you know, I could see Galaxy Digital making quite a bit of money on top of this. I just think that speaks to Galaxy Digital's strengths, right? They have so many different uh arms out there. They're really crypto merchant bankers, but they've kind of been called uh they have staking, they have trading, they have a research team, they have so much going on over there. So it makes sense for them to be tapped for this role, Jen. Yeah, you said pretty much everything I was gonna say. The article says that John J Ray the third is worried that selling all in one go could cause the price to plummet. So there has to be a strategy here. I think that Galaxy Digital is probably the right entity to tap in. If we think back to that story, we talked about a few weeks ago. Now there's this tension building right between the Creditors Committee and all of the lawyers and executives that are trying to tie up FTX as a state. The Creditors Committee is saying, hey, you're spending $1.5 million a day. It's equating to about $50 million a month. And then we have all of these assets that are just sitting around and doing nothing for us. I think this is one step in the, in the right direction. Maybe came out of that tension between the Creditors Committee and John Ray and his team of lawyers and, and executives. And so I think this is a a good step but that $1.5 million is such a big number to swallow. I just wonder at the end of all of this, once everything is balanced out how much will be left for the creditors. But unfortunately, this is just the way that uh bankruptcies go, Zach, what did, what did you make of the numbers we saw on this? Yeah, Jen just front ran that next headline. Let's see, the headline guys 1.5 million a day, 50 million a month, $200 million. It's very expensive, this mega confusing and complex bankruptcy case and yeah, it's absolutely a point of contention for people who are looking to get, uh, as much on the dollar back as possible. Right. If you see a legal team that's burning through these types of expenses and you're just, you know, a small holder looking to get your, uh, your, your cents on the dollar. It's very frustrating. So, I think this is certainly a point of contention as we see again, this kind of war of words between the competing parties in this long and protracted bankruptcy case. Um Those are my thoughts that's kind of the high level of this other uh development with the FC bankruptcy story. Although it's a will for uh any additional thoughts that you might have. Yeah, I don't have much besides that. Like, I'm not an expert on Chapter 11 estates and because I don't have a ton of reference for how much they should be spending, it seems like too much and like the creditors definitely think it's too much and they've made a lot of appeals to both the estate and then all the governing parties are overlooking the, the sell of these assets and saying like, hey, you guys need to back up, you guys need to like be able to tire with these things because every dollar that is not uh spent on legal stuff should be going back to the creditors of the f the state that seems to be falling on deaf ears. Again, that $1.5 million per day is pretty astounding. At the same time, you're looking at like the amount of credit that needs to be unwound the amount of debt that needs to be unwound the amount of just different various deals and fake or real business entities that need to be understood. There's a lot of work ahead of these people. So at some level it does make sense and good lawyers, good CPA S they be expensive. Yeah, another sort of like corresponding development is that like SPF right, who's in jail? Uh He had been granted unlimited access to his lawyers ahead of the October 3rd hearing. Uh stressing the need for uh being able to prepare for this case and look through troves of documents relating to this thing. So this is the Dribs and Drabs of the legal process as it relates to the most spectacular implosion in crypto history. And you know, I got, I feel sympathy with Wendy who on the show yesterday said I just don't care. There's a lot of stuff going on, a lot of procedural stuff that we get to report on every day. But it all adds up to just the mounting tension and excitement over what will surely be the trial of the century as it relates to the crypto industry. So pretty wild, but I'll talk to you. Yeah, I just want to add to that story you just brought up there. Zach SPF is now allowed to be visited by his lawyers an unlimited amount of time while he's in jail. That is, of course, after he requested to be allowed to leave jail five days a week to meet with his lawyers in their Manhattan offices. That was, um, declined, but his lawyers can visit him. But that's not anything new lawyers should usually be able to visit their clients during visiting hours for as long as they want. And, and for as many times as they want, um, we had a lawyer on first mover this morning who said the issue is that often the prisons, um, have there are some barriers with dealing with the prisons and actually getting access um to clients from lawyers. And so the reason that the judge said this is so that if there are any issues, the lawyers will be able to go back to the judge and get some kind of document saying that they are able to access SPF so just a lot of legal stuff happening here, but nothing of this is out of nothing here is out of the ordinary.

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