Is it a vast galaxy or a black hole? Galaxy Digital's investment loss expanded to $272 million

According to financial data released on Monday, Galaxy Digital Holdings, a former cryptographic commercial bank created by former hedge fund manager and billionaire Michael Novogratz, lost $97 million in the fourth quarter of last year.


Image source: pixabay

According to documents submitted to Canadian securities regulators, Galaxy Digital's third-quarter net loss has expanded to $76.7 million, compared to about $100,000 in the same period last year. (In February last year, Galaxy, based in New York, acquired a Canadian listed company through a reverse takeover.)

2018 was the first year of operation of the company, with a loss of $272.7 million for the year.

Most of the deficit in 2018 ($101.4 million) came from the sale of digital assets at a loss.

Galaxy also had a book loss of $75.5 million, including a drop in the price of its cryptocurrency, $8.5 million in unrealized investment losses, and $88.4 million in operating expenses.

Which currency is losing money?

By the end of 2018, Galaxy had 9724 BTC ($36.4 million), 92,545 ETH ($12.3 million), 2.4 million EOS ($6 million) and 60,027 Monroe ($2.8 million). In early 2018, the company began to increase its investment in Bitcoin and Ethereum, which held 5,902 BTCs and 57,000 ETHs.

Galaxy also held a large number of Wax ($50.2 million) and BlockV tokens ($17.4 million), but these coins disappeared from the company's top investment at the end of 2018.

According to the report, Galaxy suffered losses in the sale of bitcoin ($70.3 million) and Ethereum ($64.4 million), but some of the losses were earned by Galaxy by shorting part of the cryptocurrency (which is not clear). The $54.3 million was offset.

At the beginning of 2018, Bitcoin was the company's biggest source of losses, and Ethereum's investment caused the biggest losses in 2018.

Interestingly, Galaxy lost as much as $47 million due to the depreciation of the Wax token. Wax tokens are an asset that powers virtual item trading platforms in video games.

Several other competing currencies also experienced price declines before Galaxy's profitability in 2018: Kin (loss of $10.9 million), BlockV (loss of $17.2 million) and Aion (loss of $8.6 million). EOS also lost about $5 million.

Agreement, mining and ICO

The value of many companies and investment funds in the Galaxy portfolio has declined.

For example, Pantera ICO Fund LP's stock depreciation resulted in a loss of $14.1 million (Galaxy currently invests $17.4 million in the fund). The company also reduced its shareholding in Hut 8 Mining Corp. of Canada by $11.3 million and reduced its holdings of Xapo by $11.1 million.

As of the end of 2018, Galaxy holds a $41.9 million stake in EOS development company Block.One. In addition, about $5 million was invested in the Galaxy EOS VC Fund, focusing on the ecosystem of EOS.IO.

At the same time, the report said that payment startup Ripple Labs received a $23.8 million investment from Galaxy, including "indirect investment through a special purpose tool."

Galaxy also invested $26 million in mining companies, including Hut 8 Mining and Bitfury; invested $7.5 million in managed and multi-signature wallet provider BitGo; and has not yet launched Bitcoin to the New York Stock Exchange parent company Intercontinental Exchange (ICE) The futures exchange Bakkt invested $5 million.

Others include investments in Silvergate Capital Corporation, the parent company of the cryptocurrency-friendly Silvergate Bank; token-based startups AlphaPoint and Templum; investment tools Cryptology Asset and Pantera Venture Fund; and Puerto Rico-based Mercantile Global Holdings. The company operates the recently established San Juan Mercantile Exchange. Galaxy also provided a $3.8 million loan to BlockFi, an encryption lending platform.


Risk factor

When it comes to the risks that Galaxy may face in the future, the report is particularly concerned that the company's power is concentrated in the hands of CEO and key stakeholder Mike Novogratz, who owns more than 71% of Galaxy's shares.

According to the document, in terms of regulatory and market risk, Galaxy is “highly dependent on Michael Novogratz, allowing shareholders to bear significant and unpredictable 'key person' risks” and adding that the CEO’s “interests may differ from the interests of shareholders”. There is a danger that he “may be engaged in activities other than GDH LP or withdraw from GDH LP in pursuit of other goals.”

The report also pointed out that it is also worth noting that the public image of Novogratz is more likely to subject GDH LP to substantive regulatory review, regardless of whether GDH LP engages in any illegal conduct, which would be costly and distracting. .

Continue to be optimistic about the cryptocurrency market

Although the crypto bear market has been going on for nearly two years and is not known to be appropriate, Galaxy founder billionaire Michael Novogratz has been madly shouting since a long time ago, never interrupted. "The 2018 crash has bottomed out", "the weak sellers indicate that the market has bottomed out", "the market will eventually recover", and so on, Michael Novogratz becomes the most famous "bullisher" in the encryption market. However, his market forecast seems to be less accurate. On the contrary, Galaxy's losses continue to expand. If the market fails to rebound, Galaxy's financial situation is not expected to improve much.

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