Novogratz’s Galaxy Digital discloses FTX exposure
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GALAXY Digital Holdings, the crypto financial services firm founded by billionaire Michael Novogratz, said co-president Damien Vanderwilt will step down in mid-January and disclosed its exposure to the collapsed exchange FTX.com.
Galaxy’s partnership, which uses FTX.com to hold assets, has an exposure of about US$76.8 million of cash and digital assets to FTX, of which US$47.5 million is currently in the withdrawal process, the company disclosed in its third-quarter results. FTX halted withdrawals on Tuesday (Nov 8), citing a liquidity crunch, and agreed to a buyout offer from Binance Holdings.
Galaxy’s net comprehensive loss was US$68.1 million, compared to a US$517.9 million gain in the year-ago period, primarily due to unrealised losses on investments, driven by reduced valuations under external market conditions.
“While our industry continues to face macroeconomic headwinds and structural evolution, Galaxy remains focused on building for the future state of institutional adoption by taking deliberate steps to transform and simplify our operations,” Novogratz, chief executive of Galaxy Digital, said in the statement.
Galaxy said it maintained a liquidity position of US$1.5 billion as of September. That includes US$1 billion in cash.
Galaxy has been exploring eliminating as much as 20 per cent of its workforce against the backdrop of a digital-assets market downturn, Bloomberg News reported last week. The New York-based company had 375 employees globally as of the end of the second quarter.
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The crypto industry has been grappling with renewed turmoil in the wake of a plunge in token prices in the spring. Prices have tumbled this week as the failure of FTX increased concern that there is more trouble brewing within the industry and among some of its top players, following widespread layoffs and earlier bankruptcies of major firms including Three Arrows Capital, Voyager Digital and Celsius Network.
Galaxy’s mining unit incurred a net comprehensive loss of US$34.9 million in the quarter, citing increased operating expense, against the backdrop of its largest third-party hosting provider reducing capacity due to market conditions, rising energy prices and constrained access to capital markets. BLOOMBERG
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