Galaxy Digital Eyes FTX Assets to Revive Fortunes Amid Crypto Turmoil

Galaxy Digital is setting its sights on acquiring assets from distressed crypto companies, including those from the beleaguered FTX cryptocurrency exchange. This development follows the company’s recent expansion of its assets under management, growing from $1.7 billion to a substantial $5.4 billion, largely due to its mandate to oversee FTX’s crypto holdings for creditor repayments.

Galaxy Digital Eyes FTX Assets Amid Recovery

After enduring a tough phase marked by significant losses, Galaxy Digital actively seeks to enhance its balance sheet by targeting assets from FTX’s extensive real estate and venture capital portfolio. Among these assets is an investment in Anthropic, a rival to OpenAI. This move comes after the firm’s court permission to liquidate FTX’s crypto assets.

Analyst Andrew Bond from Rosenblatt Securities suggests this could be a turning point for Galaxy Digital. He notes that managing FTX’s holdings could pave the way for Galaxy Digital to secure more lucrative mandates in the future. Galaxy Digital has made promising investments in other areas, despite a $94 million loss in the third quarter and suffering a $77 million setback from the FTX collapse. Its stakes in crypto custody specialist Fireblocks and Polygon Labs highlight its diversified investment strategy.

The recent turmoil in the crypto market has led to a wave of bankruptcy proceedings, affecting several major players. After facing insolvency linked to an Ethereum derivative token, Crypto lender Celsius has been authorised to repay its creditors. Similarly, bankrupt crypto lender BlockFi is on track to start creditor repayments by the end of the year. These developments are part of a broader restructuring trend within the crypto industry.

Galaxy Digital Expands into the Bitcoin ETF Market

In a related development, Binance’s US operation, which had initially shown interest in acquiring the assets of bankrupt crypto broker Voyager Digital, stepped back due to regulatory concerns. With around $649 million in creditor repayments, Voyager is a significant entity in this ongoing industry recalibration.

Galaxy Digital is also expanding its scope in other areas besides its focus on distressed crypto assets. The firm is actively involved in trading and investment banking and is pursuing a Bitcoin exchange-traded fund in partnership with CME Group and Invesco. This move indicates Galaxy Digital’s commitment to diversifying its offerings and enhancing its crypto financial services market position.

Furthermore, Galaxy Digital has forged partnerships with Deutsche Bank’s DWS Group and Flow Traders, a Dutch market maker, to launch a euro-backed stablecoin. Such initiatives reflect the firm’s strategy to broaden its financial products and services, catering to a wider range of clients and market needs.

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