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Galaxy Digital Expands Reach In Crypto Sector Post-FTX Deal
Galaxy has been increasing its exposure to digital assets following a wave of bankruptcies in the sector.
Galaxy Digital, led by US billionaire Mike Novogratz, is expanding its footprint in the cryptocurrency industry, focusing on acquiring assets from bankrupt digital asset companies. This strategic move follows the firm's successful deal involving FTX's assets, which significantly increased its funds under management.
Galaxy's Growth And Strategy
In August, Galaxy Digital was selected by the administrators of the now-defunct crypto exchange FTX to manage the sale, hedging, and staking of FTX’s Bitcoin and Ether holdings, along with Grayscale’s bitcoin trust. This initiative has propelled the New York-based company's assets under management from $1.7 billion to $5.3 billion within a year.
The firm, recognized as a leading crypto financial services group, experienced difficulties following the 2020 crypto market crash. Despite a $94 million loss in Q3 this year, the recent surge in assets represents a significant turnaround. Galaxy's strategy involved methodically selling FTX's tokens in the open market, aligning with the court's directive to sell assets in $100 million weekly increments without market disruption.
Potential Acquisition Targets
Steve Kurz, Galaxy's Global Head of Asset Management, expressed interest in acquiring assets from other bankrupt firms. Potential acquisitions include FTX's venture capital portfolio, which boasts investments in real estate, technology companies, and artificial intelligence startups like Anthropic, valued at nearly $5 billion.
Galaxy’s venture team, with a five-year track record of investing in entities like Fireblocks and Polygon, is well-positioned to manage such acquisitions. Andrew Bond from Rosenblatt Securities highlighted the significance of the FTX mandate for Galaxy, suggesting it could lead to more lucrative opportunities.
Expansion And Market Impact
Galaxy is not just focusing on acquisitions but also diversifying its offerings. It plans to transfer its stock market listing from Toronto to Nasdaq and has recently collaborated with Flow Traders and DWS to launch a euro-denominated stablecoin. Additionally, Galaxy is vying for a spot in the emerging bitcoin ETF market, partnering with Invesco and Cboe Global Markets.
The anticipation of bitcoin ETFs has driven a 150% surge in Bitcoin's price. Steve Kurz noted the potential impact of these vehicles on the crypto market, emphasizing ongoing dialogues with the SEC. Kurz, with a background at Fortress Investment Group and Lehman Brothers, regards the approval of a bitcoin ETF as a pivotal moment for the cryptocurrency industry.
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