Mike Novogratz’ ambitious crypto merchant bank venture, Galaxy Digital (TSXV: GLXY; Frankfurt: 7LX) has been licensed by FINRA to underwrite crypto-token offerings, which will lead to the, “expansion of its broker-dealer, Galaxy Digital Advisors LLC,” Galaxy Digital states in a press release July 24th.
According to TechCrunch, Galaxy Digital has described itself as a, “bridge between the crypto and institutional worlds.”
“Galaxy Digital is a merchant bank with a balance sheet to invest,” Galaxy’s Sam Englebardt told the outlet last March. “We invest in everything blockchain and crypto-related and in the future of tech broadly. We’re also publicly traded in Toronto [having executed a reverse merger with a shell company on the exchange]. We’ve invested several hundred million dollars already in blockchain and crypto investments and tokens.”
Englebardt also claimed in March that Galaxy was managing $300 million USD of $4 billion USD traided in the EOS blockchain ICO raise.
Englebardt called EOS, “an evolution of Bitcoin and Ethereum.” Critics have called it a cash grab, another in a long line of supposed “public” blockchain projects launched mainly to enrich early investors.
In May, Galaxy sold “a majority of the Company’s position” in Block.one (creator of EOS) shares back to Block.One itself, and said in a relevant press release that Galaxy holdings of Block.one shares “…will no longer represent a material investment position,” in the venture.
Galaxy says it received, “…$71.2 million for the tendered shares representing…a 123% return on the realized investment,” and Novogratz said the company had decided to take profit while other assets were down:
“The acceptance of Block.one’s tender offer reflected a decision to rebalance the portfolio to maintain an appropriate level of diversification after the position increased due to its substantial outperformance relative to the remainder of the portfolio.”
Galaxy was started in 2017, the year many crypto watchers witnessed parabolic gains of 20x and more.
Like many other crypto investment firms and individual speculators since, Galaxy’s fortunes have been variable.
The company posted a $272.7 million dollar loss in 2018, corporate filings indicated in May of this year.
Englebardt described other aspects of the business as follows:
“We’re also in the process of raising a credit and special opportunities fund to make structured credit investments in the (cryptocurrency/token) space. We have an index fund. It’s a portfolio of investment products. Galaxy Digital more broadly has an investment business, a trading business — Mike is best-known for and been a macro trader and is now trading around crypto tokens and liquid products — and then an advisory business, too. We’re a registered broker-dealer doing M&A advisory, increasingly focusing on what we think will be opportunities as startups begin to [consolidate their efforts], and also doing traditional capital raising for startups and later-stage companies.”
“Our investment business is our biggest business by far. Our trading business is growing quickly, even through a downturn in the market, though it’s really taking the longest to stand up as any trading business would. Our advisory business is [the most nascent].”
Galaxy calls permission to underwrite: “an important step in the development of our advisory franchise.”
As an underwriter, Galaxy will have first dibs on digital tokens before they reach the public and will assume some of the risk.
“We now have the ability to finance digital asset and blockchain technology companies through their entire life cycle – from founding, through private capital raisings, to their initial public offering and beyond,” Ian Taylor, Head of Advisory Services for Galaxy Digital, stated in the release.
Novogratz, famous for spectacular wins and losses during his days as a Wall Street hedge funder said the designation, “enables us to expand our ability to educate investors newly interested in this growing sector and further institutionalize the markets in which we operate.”
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