Crypto Financial Firm Galaxy Digital Reveals $76.8M FTX Exposure as CEO Novogratz Hunkers Down

Galaxy is withdrawing $47.5 million from the crypto exchange.

AccessTimeIconNov 9, 2022 at 12:43 p.m. UTC
Updated May 9, 2023 at 4:01 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Galaxy Digital (GLXY), the crypto-focused financial-services firm run by Michael Novogratz, said on Wednesday that it has exposure of around $76.8 million of cash and digital assets tied to troubled crypto exchange FTX.

In a statement, the firm also reported a third-quarter net loss of $68.1 million, compared with a $517.9 million profit in the same period last year, and said Damien Vanderwilt will step down as co-president in January.

  • What Challenges Do Appchains Solve?
    00:59
    What Challenges Do Appchains Solve?
  • Appchain Protocol Tanssi Raises $6M
    18:57
    Appchain Protocol Tanssi Raises $6M
  • Breaking Down Internet Computer's 40% Rally
    00:59
    Breaking Down Internet Computer's 40% Rally
  • HSBC Brings Tokenized Gold to Hong Kong; Munchables Exploited for $62M
    02:14
    HSBC Brings Tokenized Gold to Hong Kong; Munchables Exploited for $62M
  • The near-collapse of FTX, which on Tuesday agreed to sell itself to rival Binance following days of speculation that sister company Alameda Research faced a liquidity crisis, has “put a short term wrench” in the crypto industry, Novogratz said on Galaxy's earnings conference call. The firm is withdrawing $47.5 million of its exposure to the exchange.

    While it's important to be “nimble and agile” in coming weeks, the industry has been able to digest multiple events and other scandals and remains resilient, Novogratz said. Crypto will eventually become correlated with the macroeconomy again and not be so event-driven, he said.

    “​​In the short run, people are nervous,” he said, noting that Galaxy remains in a good position to navigate the current environment. Novogratz also called Galaxy’s stock, which fell as much as 22% to C$3.63 on Wednesday, “unbelievably cheap.”

    Separately, co-President Chris Ferraro said Galaxy has no exposure to Alameda and no exposure to FTX's exchange token FTT as collateral for its lending business. The company's only direct exposure is through its FTX balances, which is “down dramatically” from a higher level.

    Last week, CoinDesk reported that Galaxy Digital was planning to cut at least 20% of its global workforce, according to sources. Novogratz said on Wednesday's call that Galaxy elected to cut about 14%-15% of its headcount, citing costs. The job cuts were tough, but necessary, he added. Novogratz also said Galaxy is boosting its investment across the engineering, security, and legal divisions of the business.

    UPDATE (Nov. 9, 16:48 UTC): Adds comments from earnings call, shares.

    UPDATE (Nov. 9, 19:45 UTC): Updates commentary on job cuts from conference call.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Parikshit Mishra

    Parikshit Mishra is CoinDesk's Deputy Managing Editor responsible for breaking news coverage. He does not have any crypto holdings.

    Author placeholder image

    Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.