Jason Urban, the head of Galaxy Digital’s trading desk, recently spoke to Forbes about the company’s experience with trading platform FTX, which collapsed in November of last year.
At the time, CEO Mike Novogratz said that Galaxy had approximately $76 million in crypto locked on the platform. When asked if the firm was able to recover those funds, Urban stated that the company was able to get a majority of their balances off, but they got gated at the last minute.
Nobody Saw FTX’s Collapse Coming
Urban went on to explain that Galaxy Digital has an extensive exchange risk committee and goes through a thorough examination process, questioning everything from legal to custody. Despite their due diligence efforts in the crypto market, fraud is still a risk. He stated that FTX was not the highest scoring platform on their examination list, but it was in the upper echelon. Jason Urban added that when someone takes money out the back door, there is nothing you can do.
When asked if the collapse of FTX and other bankruptcies throughout the year have forced Galaxy Digital to change their approach to risk management, Urban stated that the firm has a number of methods in place. Some of them include a minimum annual vetting and proactive measures to respond to rumors or concerns.
The company deals primarily with institutional clients, who have a credit limit, and the firm is quick to respond if they hear something that requires further investigation.
Avoid Making the Same Mistakes in Crypto
For retail traders looking to perform due diligence on trading platforms, Urban recommended:
Having a few trusted venues that are understood and can be easily moved between.
Be cautious and to consider if something sounds too good to be true, it probably is.
When looking at crypto it is important to understand that you are buying a technology as much as you are buying an asset.
Urban went on to recommend evaluating each crypto asset to determine if the problem it is solving is worth solving and if the instrument has the ability to make money or add value.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.