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Galaxy Digital’s Q2 Net Loss Tripled To $554.7 Million Amid Market Turmoil

Galaxy Digital Holdings Ltd, on Monday, announced its second-quarter earnings report that showed that the company has more than tripled the amount of the net loss it witnessed in the same period last year.

The digital asset manager said the expanded loss during the period was triggered by the current market downturn as well as investments in its trading business, which collectively drove unrealized losses higher during the period.

Galaxy stated that its net loss stood at $554.7 million in the second quarter, compared to a loss of $182.9 million during the same period last year.

The company said that its cash at hand stood at $1 billion while its net digital asset positions stood at $474.3 million in the second quarter.

On Dec. 31, 2021, Galaxy Digital said it had $811.1 million in cash and $1.21 billion in net digital asset positions.

The firm said its preliminary assets under management were almost $1.7 billion at the end of the second quarter, compared with $1.6 billion a year ago. However, assets under management declined 40% from the first quarter.

Galaxy is a major US-based financial services and investment management firm that provides institutions and clients with a full suite of digital assets and financial solutions.

Galaxy mentioned that its mining business made a revenue worth $10.9 million in the second quarter, and its comprehensive net income tripled from a year ago.

The company said investments it made in its trading business stood at $753.9 million at the end of June, a decrease of about 25% from March 31, majorly due to the decline in the valuations of certain investments.

The Crypto Market Plunge as Hard Lesson for Asset Managers

The crypto market experienced a full meltdown in May and June, losing $1 trillion in value within a few weeks.

The sudden and rapid collapse of popular cryptocurrencies and crypto-related firms (such as Three Arrows Capital, and Celsius Networks, among others) revealed the unstable nature of the crypto industry.

Among companies that experienced massive losses worth millions of dollars were Galaxy digital, Coinbase, and others.

This year, Coinbase has seen its stock price plunge 81% and has recently announced plans to cut 1,100 employees as it grappled with a slowdown in trading that has compelled it to abandon its growth plans. In the first quarter, Coinbase reported a loss of $430 million.

Most crypto asset managers are now struggling because fewer users on the platforms are making transactions.

Early this year, prices of bitcoin, Ethereum and other major coins began dropping as soaring inflation tightened its grip on the U.S. economy.

But all is not lost for crypto asset managers as more bounces are expected in the market. Despite recent struggles, these firms will make it through the ongoing crypto market clampdown and eventually thrive. That is because these firms have learned how to survive such downturns.

Galaxy Digital Terminates BitGo Acquisition, But Still Eyes Listing on Nasdaq

Galaxy Digital, one of the leading crypto financial services providers, has announced its plans to terminate the proposed acquisition of crypto infrastructure service provider, BitGo.

The deal is billed to be completed in the first quarter of this year, as reported earlier by Blockchain.News, but Galaxy Digital said it had to terminate the acquisition as BitGo did not fulfil some of the terms of the acquisition.

According to Galaxy Digital, BitGo has refused to deliver its audited financial statements for 2021 that comply with the requirements of our agreement. Per the announcement, this financial statement was due by the end of July this year. The company said would be no termination fee associated with the broken partnership and acquisition.

“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions,” said Mike Novogratz, CEO and Founder of Galaxy.

While it revealed the deal’s termination, Galaxy Digital said it still plans to go public in the United States and eventually trade on the Nasdaq Global Select Market. The proposed listing was pushed to this year. Despite the onslaught in the digital currency ecosystem, the firm said the loss is now dependent on the completion of the SEC’s review and subject to stock exchange approval of such listing.

BitGo came off as a very well-coveted startup for prominent players in the digital currency ecosystem at a time. Before Galaxy Digital submitted its bid for the company, there were reports that Paypal also had its eye on the firm, as it was making its way into the digital currency ecosystem with new product suites back in 2020.

Crypto Firm BitGo Files $100m Lawsuit against Galaxy Digital for Breaching Acquisition Deal

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BitGo has filed a lawsuit against crypto financial services firm Galaxy Digital.

The California-based institutional digital asset financial services company is seeking more than $100 million in damages as it claims that Galaxy Digital intentionally breached the companies’ proposed $1.2 billion merger agreement announced in May last year.

On May 5 2021, Galaxy announced plans to acquire custodian provider BitGo for $1.2 billion in cash and stock.

However, last month on August 15, Galaxy terminated its deal to acquire BitGo, something that did not go with the other party. BitGo immediately responded, saying it would seek $100 million in damages following the termination of its merger with Galaxy Digital.

In a tweet yesterday, BitGo announced: “Late yesterday, BitGo filed a lawsuit against Galaxy Digital seeking damages of more than $100 million arising from Galaxy’s improper repudiation and intentional breach of its merger agreement with BitGo.”

The crypto custody firm further said that the complaint was filed in Delaware Chancery Court and will be made available to the public on Thursday, September 15.

In a statement, BitGo disclosed its intention to sue Galaxy, describing the termination of the deal as “absurd.”

What Caused the Failed Merger Deal?

On August 15, Galaxy Digital announced that the firm terminated a proposed $1.2 billion stock and cash deal that would allow the crypto company to acquire the digital asset custody business and financial services provider BitGo. Galaxy detailed that the abandoned deal was due to BitGo’s “failure to deliver” specific financial documents.

Galaxy said it exercised its right to terminate its previously announced acquisition deal with BitGo, following BitGo’s failure to deliver by July 31 audited financial statements for 2021 that comply with the requirements of the proposed agreement. Galaxy further stated: “No termination fee is payable in connection with the termination.”

The news of the failed merger came only a week after Galaxy reported a second-quarter net loss of $554.7 million following a plunge in the value of cryptocurrencies.

The financial losses followed Galaxy’s exposure to the collapse of TerraUSD algorithmic stablecoin in mid-May.

The collapse of the Terra blockchain ecosystem hit confidence in cryptocurrencies. Several crypto lending firms such as Celsius Networks, Voyager Digital, Vauld, Zipmex, Babel Finance, among others, were forced to stop customer withdrawals, and many became bankrupt.

ACA Group Has Decided to Abandon its Acquisition of BitFlyer Holdings

ACA Group, a leading financial advisor for institutions across the world has officially announced to the public that it is no longer interested in purchasing holdings of a Japanese-based cryptocurrency exchange, BitFlyer.

The ACA Group which is based in both Singapore and Japan announced the news on Saturday through Nikkei.com.

ACA Group had earlier in April agreed to purchase majority stake holdings of BitFlyer valued at up to $370 million (45 billion Yen).

The intention of ACA Group was to sell off the BitFlyer holdings after it has increased in corporate value. A coalition of shareholders independently negotiated the ACA agreement with the support of Minefumi Komiyama, the founder of bitFlyer, who owns about 13% of the company.

Not much information was given by ACA Group on their decision to back out from their initial agreement but the decision comes after a number of proposed collaboration has come to halt recently including Galaxy Digital, which terminated its planned acquisition of crypto manager BitGo in August.

All About BitFlyer

BitFlyer is a private company in Tokyo, Japan. The company is involved in buying, selling, and trading bitcoin and other cryptocurrencies with more than 2.5 million users across its platform. BitFlyer was launched against the backdrop of Bitcoin’s permanent market cap of $14,000.

The Tokyo-based crypto exchange BitFlyer recorded a loss of about $6.9 million in profit for the company’s financial year ending in 2019. The loss in profit was a result of a drop in the value of Bitcoin (BTC) in the second half of 2019.

The Financial Service Agency also discovered a security mishap in BitFlyer’s business processes which eventually expose its customers’ investments to cyber theft in 2018.

BitFlyer responded to the issue by promising to stop receiving new businesses after regulators said they were not putting the needed efforts and structures to curb money laundering and the finance of terrorism.

The future is still bright for BitFlyer as it has continually shown resilience in the face of adversity over the years. The firm hopes that investors use their previous success to judge them while considering future investments with them.

Mike Novogratz Considers Galaxy's Helios Purchase "Transformative"

As Galaxy Digital Holdings attempts to grow its exposure to the Bitcoin mining industry, the CEO of the company, Mike Novogratz, has described the plan to acquire Helios Mining as a “transformative acquisition” for the company.The crypto investment company made the announcement on the 28th of December that it would be purchasing Argo Blockchain’s flagship mining operation for $65 million. This transaction was part of Argo’s dramatic measure to fend off bankruptcy.On December 29, Novogratz tweeted about the acquisition and stressed that Galaxy is a big believer in the long-term future of Bitcoin and that the firm would continue to ramp up its mining operations. Novogratz was commenting on the fact that Galaxy will continue to ramp up its mining initiatives.In his additional explanation of the transaction, Galaxy’s Chief Executive Officer stated the company’s unique thesis on how it intends to approach the mining industry, which is as follows: “low-cost power, a highly efficient staff,” and “purchasing ASIC miners inexpensively.”The most recent findings from Hashrate Index indicate that the costs of Bitcoin ASIC miners are hanging at lows that have not been seen since at least 2021. The prices of the most efficient ASIC miners have dropped by 86.8 percent since reaching their high in May 2021.According to the information provided on its website, the company is now managing assets worth a total of $1.9 billion.Novogratz points out, however, that if the firm has 200 megawatts (MW) capacity Helios, it will not only be able to operate miners on its own site, but it will also be able to host for other people.Helios has the potential to scale very well, which would put it in the running to be one of the largest miners on the market.A prior announcement made by Argo Blockchain in May of this year said that the company intended to boost its electricity capacity to 800MW in the years to come.Additionally, the company said at the time that it anticipated Helios will achieve a Bitcoin mining capacity of 5.5 exahashes per second by the end of the year, with the possibility that it would ultimately reach 20 EH/s.Given that Galaxy also extended Argo Blockchain a $35 million equipment financing loan in conjunction with the transaction, it would suggest that Galaxy has some cash on hand to spend despite the bear market that is expected in 2022.

Bitcoin NFTs to Hit $4.5B Market Cap

Galaxy Digital’s research unit has predicted that the Bitcoin nonfungible token (NFT) market could reach a $4.5 billion market cap by March 2025 based on the current growth rate and infrastructure of Ethereum’s NFT market. This is due to the emergence of a native on-chain ecosystem for NFTs on Bitcoin, which was not possible before the launch of the Ordinals protocol in late January.

Bitcoin NFTs, also known as Ordinals, allow users to inscribe data such as images, PDFs, video, and audio onto individual satoshis, each representing 0.00000001 Bitcoin (BTC). The market for Bitcoin NFTs has attracted significant attention since the launch of the Ordinals protocol, with NFT giants such as Yuga Labs jumping in on the hype. On February 28, the $4 billion firm behind the Bored Ape Yacht Club announced a Bitcoin-based NFT project dubbed “TwelveFold” in recognition of the Ordinals movement.

Galaxy researchers analyzed the potential growth of Bitcoin NFTs in a new report published on March 3. The report provided three market cap predictions based on the firm’s analysis, covering bear, base, and bull case scenarios. The baseline analysis predicted that if Bitcoin NFTs can expand to mainstream NFT culture like profile pictures, memes, and utility projects, the market capitalization should increase to $4.5 billion.

The researchers also noted that the projection of $4.5 billion is based on the rapid development in inscription awareness coupled with the marketplace/wallet infrastructure already out today. In a bear case scenario, Galaxy estimated that Bitcoin NFTs can still reach a market cap of $1.5 billion based on the current level of interest and supporting infrastructure. On the bullish side of things, Galaxy researchers estimate that the Bitcoin NFT market could reach around $10 billion if it provides strong competition to Ethereum NFTs while providing unique use cases.

The report highlighted the significance and utility of Bitcoin NFTs, noting that the addition of sizable data storage with strong availability assurances opens up a variety of use cases, including new types of decentralized software or Bitcoin scaling techniques. Even the NFT use case alone has the potential to dramatically widen the scope of Bitcoin’s cultural impact.

As of the report’s publication, more than 250,000 Ordinals have hit the market, indicating the growing interest and adoption of Bitcoin NFTs. With the emergence of a native on-chain ecosystem for NFTs on Bitcoin, it will be interesting to see how the market evolves and whether it can compete with Ethereum’s NFT market.

SEC Delays Decision on Invesco and Galaxy Digital's Ether ETF

Invesco and Galaxy Digital have proposed a spot Ether (ETH) exchange-traded fund (ETF), and the United States Securities and Exchange Commission (SEC) has recently extended the period for making a decision about whether or not to approve or disapprove of the proposal. It is clear that the Securities and Exchange Commission (SEC) will continue to exercise caution with regard to financial products that are based on cryptocurrencies.

On the Cboe BZX Exchange, the proposal in issue calls for the listing of shares of the Invesco Galaxy Ethereum ETF and the trading of such shares. Should it be authorized, this exchange-traded fund (ETF) would be among the very first of its type. It would provide investors with the opportunity to obtain exposure to Ether, the cryptocurrency that is responsible for powering the Ethereum blockchain, via a regulated financial instrument.

In the beginning, it was anticipated that the SEC would reach a ruling by the 23rd of December in 2023. However, in a notification that was sent on December 13, the Commission declared that it would need further time to consider the plan. As a result, the deadline was extended to February 6, 2024. The SEC is now able to conduct a comprehensive analysis of the effects that such a financial product would have on the market and the protection of investors thanks to this extension.

The resolution to prolong the assessment time brings to light the continuing discussions that the Securities and Exchange Commission is having over the incorporation of cryptocurrency products into the conventional financial system. Although the cryptocurrency community is anxious for such products, the Securities and Exchange Commission (SEC) has taken a cautious attitude because it is concerned about market volatility, regulatory compliance, and investor protection in the cryptocurrency sector, which is relatively young and is always growing.

When it comes to the acceptability of cryptocurrencies by the general public, the establishment of an Ether exchange-traded fund (ETF) would be a big milestone. It would give investors with a regulated and perhaps less hazardous channel to obtain exposure to Ethereum, which is not simply a cryptocurrency but also a platform for decentralized apps and smart contracts. This would be something that investors could take advantage of.

Following the announcement that the deadline for the SEC’s judgment on the Invesco Galaxy Ethereum ETF has been set for the beginning of 2024, market players and cryptocurrency aficionados are keeping a careful eye on this development. It is quite probable that the conclusion will have significant repercussions for the future of cryptocurrency investments as well as the wider use of blockchain technology in the financial sector.

SEC Delays Decision on Invesco-Galaxy Digital's Ether ETF

The Securities and Exchange Commission (SEC) of the United States has recently decided to delay its judgment about the exchange-traded fund (ETF) that Invesco and Galaxy Digital have proposed to be a spot Ether (ETH) currency. During this delay, the Securities and Exchange Commission (SEC) will conduct a comprehensive evaluation of the possibility of listing and trading such an exchange-traded fund (ETF) on the Cboe BZX Exchange. The Securities and Exchange Commission (SEC) has extended the timeframe for its final decision by an additional 35 days, making it possible for the public to provide feedback on the plan. The proposal was published in the Federal Register. Because of this step, the Securities and Exchange Commission (SEC) will have up to 240 days in total to reach a final judgment about the exchange-traded fund (ETF). The first file will be submitted by the asset management in October 2023, and it will be published in November. This brings the deadline for the SEC’s decision to July 2024.

Prior to granting approval for the public trading of Ether-based exchange-traded funds (ETFs), the Securities and Exchange Commission (SEC) has historically taken a cautious stance toward financial products connected to cryptocurrencies. This deferral reflects the SEC’s goal to guarantee full market assessment and investor protection. In its request for public comments on this proposal, the Securities and Exchange Commission (SEC) highlights its effort to gather insights on various aspects, such as the ETF’s compliance with the Exchange’s rules for commodity-based trust shares and considerations about the distinctive characteristics of Ether and its ecosystem, such as its proof of stake consensus mechanism and the concentration of control or influence.

In order to provide investors with a well-regulated and publicly traded vehicle through which they may obtain exposure to Ether, the proposed Invesco Galaxy Ethereum Exchange-Traded Fund (ETF) intends to monitor the spot price of Ether. This project is a part of a larger trend of investment businesses that are looking to incorporate bitcoin assets into conventional financial markets. The goal of this movement is to provide a bridge between digital currencies and fiat currencies within the context of regulated frameworks.

As part of a larger narrative in which regulatory bodies are weighing the integration of cryptocurrencies into mainstream financial products, the Securities and Exchange Commission (SEC) is currently deliberating over the Invesco Galaxy Ethereum Exchange-Traded Fund (ETF). The outcome of this discussion has the potential to establish precedents for future cryptocurrency ETFs and other financial instruments that are based on digital assets.

Galaxy Digital CEO Believes Bitcoin Will Not Fall to $50,000-$55,000 Without Major Shift

The cryptocurrency ecosystem often looks to its leaders for insights into the market’s future trajectory. Michael Novogratz, CEO of Galaxy Digital, recently weighed in on Bitcoin’s price dynamics, offering a perspective that hinges on the performance of U.S. spot Bitcoin ETFs.

Novogratz, a former hedge fund manager turned crypto enthusiast, asserted that Bitcoin is unlikely to tumble back to the $50,000-$55,000 range unless a dramatic shift occurs, according to an interview with CNBC. His confidence in the current price levels of the leading cryptocurrency is closely tied to the activity around nine U.S. spot Bitcoin ETFs. These investment vehicles allow for exposure to Bitcoin without the complexities of direct ownership, and their flows are indicative of institutional and retail sentiment.

According to Novogratz, as long as these ETFs experience net inflows, the price of Bitcoin could continue its upward grind. This viewpoint aligns with the broader market sentiment that institutional adoption is a driving force behind Bitcoin’s recent price action. The introduction of these ETFs has been a watershed moment, signaling a maturation of the cryptocurrency market and providing a bridge for traditional investors to enter the space.

However, Novogratz also cautioned that if net outflows from these ETFs were to occur, it could signal the onset of the first significant price correction since the ETFs’ inception. This could be catalyzed by a variety of factors, including regulatory changes, macroeconomic shifts, or a change in investor sentiment.

The Galaxy Digital CEO also touched on the subject of funding rates, which are payments made based on the leverage used in futures contracts. High funding rates can sometimes indicate excessive leverage and speculative frenzy, which can lead to market volatility and corrections. Novogratz emphasized the importance of being prepared for such corrections, stating that periods of high funding rates should be met with caution by investors.

Novogratz’s comments come at a time when Bitcoin has shown remarkable resilience, buoyed by institutional adoption, growing mainstream acceptance, and its perceived role as a hedge against inflation. While naysayers have frequently predicted its demise, Bitcoin’s persistence has defied expectations, and its price movements continue to be a topic of intense speculation and analysis.

In the broader context, the performance of Bitcoin and the cryptocurrency market is increasingly intertwined with global financial systems. As more traditional financial institutions embrace digital assets, the impact of ETFs and other investment products will likely become more pronounced. For investors, the key takeaway from Novogratz’s remarks is the importance of staying informed about market flows and being agile in response to changing conditions.