The company was started by legendary hedge fund manager Mike Novogratz in mid-2017.
But 2018 failed to yield the institutional stampede into crypto that industry participants were hoping for. Now, numerous venture firms are typically holding “digital assets” worth much less that what they were acquired for.
According to Galaxy Digital, “as of December 31, 2018, digital assets and investments totaled $249.1 million, a decrease from $323.0 million as of September 30, 2018. The $73.9 million decrease for Q4 2018 was primarily a result of $48.7 million of net realized losses on digital assets and $25.0 million of unrealized loss on investments.”
The net comprehensive loss for the year was $272.7 million due primarily to net realized and unrealized loss on digital assets of $101.4 million and $75.5 million respectively and operating expenses of $88.4 million. The company says the primary drivers of the operating expenses were $31.3 million of equity-based compensation and $26.9 million of compensation and compensation related expense.
Galaxy Digital also lost money ($47 million) selling tokens created to fund WAX, “…a decentralized platform designed to allow users to create a fully-functioning marketplace for online video game assets.”
WAX tokens appear to have been sold as “utility tokens” that would one day allow users to list their “video game assets” (coveted digital costumes, trinkets, potions and weapons, for example) on the WAX platform once it was built.
The notion of “utility tokens” has been ridiculed by crypto pundits like Tone Vays, who has stated the notion was just used to trick investors into buying unlicensed securities. “That’s like buying products on Amazon with Amazon stock,” said Vays.
According to data at CoinMarketCap, WAX tokens briefly traded for more than $4 USD in January 2018, but now trade for less than 10 cents.
Galaxy Digital also reportedly also lost money on crypto companies and funds it invested in, including the Pantera ICO Fund (loss of $14.1 million); Hut 8 Mining Corp (loss of $11.3 million), and on Xapo crypto wallet (loss of $11.1 million).
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