Restoring Stability and Credibility to Crypto

“Our job at Galaxy Asset Management is to demystify this space and chart a sensible path forward, no matter the operating environment. With FTX, our disciplined, conservative approach—built on transparency, qualified custody, and rigorous controls—helped to protect our clients and position us as a leader in restoring trust to the industry.”

–Steve Kurz, Global Head of Asset Management

Background

In November 2022, FTX Trading collapsed. What began as a liquidity crunch rapidly unraveled into one of the most shocking frauds in financial history, exposing widespread misuse of customer funds, governance failures, and systemic risk. The fallout was swift and severe with crypto markets plunging. Billions of dollars in user assets were frozen, institutional capital pulled back, and what was perhaps most damaging of all, confidence in the legitimacy and future of the crypto industry was shattered.

FTX’s bankruptcy left behind a tangled mess of digital assets – thousands of tokens scattered across hundreds of wallets spanning dozens of blockchains. The estate included everything from highly liquid assets like BTC and ETH to obscure altcoins, long-locked positions, and non-fungible tokens (NFTs) with uncertain market value and provenance. Navigating this fragmented landscape required more than legal process. It demanded operational precision, market expertise, technical fluency and strategic judgment.

Amid this historic breakdown in trust, the court-appointed Galaxy Asset Management to help clean up the wreckage and lead one of the most complex digital asset recoveries. With a proven track record in crypto-native portfolio management, regulatory- grade infrastructure, deep crypto market expertise, institutional risk controls and operational independence, Galaxy was tasked with bringing structure and stability to a process fraught with legal, financial and technological challenges.

In a moment when the industry’s future was in question, Galaxy’s role was not just to recover funds for creditors, but to reinforce stability and demonstrate that crypto could be managed with the same fiduciary rigor as traditional finance.

Fulfilling This Mandate

As the crypto market began its first meaningful recovery about a year after the collapse of FTX, the U.S. Bankruptcy Court appointed Galaxy Asset Management as the exclusive investment manager of the FTX digital asset estate. Since 2018, Galaxy Asset Management has had a reputation for managing a broad suite of strategies in addition to working with stakeholders across the digital asset ecosystem.

To be appointed as the exclusive investment manager of the FTX estate was a pivotal inflection point, not just for the estate, but for the broader industry. The court’s selection wasn’t simply about finding an executor for asset sales, but suggested a recognition that a crypto-native firm with institutional scale could navigate this complexity responsibly.

While some may have been tempted to simply liquidate the assets quickly, Galaxy’s approach was grounded in conviction, expertise, and discipline. With deep knowledge of crypto market structure, onchain dynamics and traditional financial macroeconomic trends, we held a bullish medium-term outlook. We understood that broader market conditions, including anticipated shifts in interest rates, liquidity cycles, and investor sentiment, could favor risk assets like crypto. As a result, we believed the value of the estate’s assets could be significantly enhanced with strategic timing and execution. A fire sale would have been easy, and anyone could have done that. Galaxy, however, added value through precision.

Galaxy's Role

At the heart of our mandate was a single principle: maximize the recovery value for creditors while preserving market stability and integrity. Galaxy’s role involved far more than selling tokens – it was a full-spectrum digital asset management solution. We delivered:

• Monetization Planning – Determining what to sell, when to sell, and how much to sell in any given market environment to balance timing, liquidity and valuation. Some assets could be efficiently monetized through one-off sales, while others required careful trade execution to navigate liquidity constraints and market sensitivity.

• Paced Execution – Working within court-approved weekly caps (initially $50M, with capacity for gradual increases) to avoid market shocks.

• Execution Precision – Utilizing TWAP strategies and other algorithmic trading tools to minimize slippage and preserve price.

• Deliberation & Discretion – Recognizing that onchain wallets linked to FTX were being closely monitored by the public and market participants, we pre-structured trades and lined up execution such that transactions were completed before any onchain token movements occurred. This allowed us to stay one step ahead, minimize market impact, and protect execution quality.

• Counterparty Selection – For illiquid or hard-to-sell positions required bespoke strategies. Where natural market liquidity was unavailable, we leveraged our network of institutional relationships to execute negotiated block trades and auctions to ensure efficient, discreet, and value-maximizing outcomes.

• Yield Generation – Rather than leaving assets idle while awaiting more favorable market conditions, Galaxy actively deployed staking and hedging strategies to generate yield and mitigate downside risk.

Bridging Regulation, Responsibility, and Recovery

At every step, Galaxy operated under the scrutiny of the bankruptcy court, regulators, and creditor representatives—an ecosystem of oversight that underscored both the sensitivity and significance of the process. Amid this oversight from multiple parties, Galaxy held true to its fiduciary duty, ensuring every decision was in the best interests of the creditors.

Galaxy had to strike a careful balance between recovering funds quickly enough to enable timely distributions, while also waiting for favorable market conditions to maximize proceeds. This required constant calibration, taking into account pricing trends, liquidity constraints, risk exposures and legal timelines, to ensure we upheld our obligation to preserve and enhance value for the estate’s beneficiaries.

Beyond the markets, Galaxy also had to bridge the worlds of crypto-native expertise and traditional bankruptcy governance. We worked closely with estate lawyers, consultants, and financial advisors who were specialists in insolvency law, but often unfamiliar with the intricacies of digital asset management. Galaxy served as both executor and translator, ensuring that complex, technical asset strategies were properly aligned with court protocols, fiduciary obligations, and legal compliance frameworks.

Locked Solana

A defining example of this complexity was the liquidation of FTX’s locked Solana (SOL) holdings; a multi-billion-dollar position under long-term vesting schedules. These assets were illiquid, sensitive to pricing optics, and structurally difficult to value.

By leveraging Galaxy’s broad industry network and market expertise, Galaxy engineered a bespoke auction framework that segmented the locked tokens into institutional-size tranches, engaged with vetted counterparties capable of holding long-duration assets, structured legal agreements that respected the lockup terms while delivering immediate capital to the estate. Through competitive bidding environments that maximized value for the estate, this process converted what many viewed as unsellable into nearly $2 billion in transparent, market-aligned proceeds, without disrupting public markets or undermining creditor value.

In short, Galaxy’s role was not to simply dispose of assets—it was to demonstrate a responsible approach for how digital asset estates should be managed—with transparency, integrity, and a deep understanding of how crypto actually works.

Conclusion

The collapse of FTX was more than a bankruptcy. It was a watershed moment for the entire crypto ecosystem. It revealed the fragility of trust, the consequences of unchecked risk, and the urgent need for institutional discipline in digital finance. But in the midst of that reckoning, it also became a proving ground for firms capable of stepping up when the stakes were highest.

Galaxy didn’t just help clean up the mess. We helped redefine how recovery in crypto could be done. Appointed at a critical turning point, when markets were just beginning to recover and sentiment remained fragile, Galaxy brought a level of precision, patience, and professionalism that went beyond traditional asset sales.

In managing the FTX estate, Galaxy demonstrated what institutional crypto asset management looks like when done responsibly: open and honest, thoughtful, and deeply informed by the realities of digital markets. We didn’t just return billions – we contributed to restoring confidence in the long-term viability of the digital asset ecosystem by proving that even amid crisis, disciplined institutions can provide order, accountability, and recovery. By navigating one of the most complex liquidations in financial history under intense legal and regulatory scrutiny, Galaxy helped establish expectations for how such processes can—and should—be handled.

The complexity of this mandate continues today. Managing such a diverse portfolio of digital assets across numerous blockchains requires ongoing monitoring, coordination, and execution. Galaxy’s efforts not only highlight the intricacy of conducting a liquidation of this scale in crypto markets but also demonstrate the institutional capacity required to navigate it successfully.

Galaxy’s leadership in the FTX recovery wasn’t just about what we did – it was about how we did it. Our approach now stands as a strong reference point for crisis resolution and responsible asset stewardship across the digital asset industry.