Galaxy Digital Holdings, the institutional crypto fund spearheaded by Michael Novogratz, an industry influencer and blockchain evangelist, reported its biggest loss to date in Q4 amounting to a staggering $97 million according to financial documents disclosed Monday to the Canadian Securities Administrators. The CSA filings are mandatory for Galaxy Digital because of the New York-based Galaxy Digital’s takeover of a publicly traded Canadian trading firm back in February 2018.
The Q4 loss was significantly higher than the $76.7 million loss reported in Q3, an increase of roughly $20 million. Part of the increase in losses for Q4 can be attributed to the fund’s decision to liquidate assets at a significant loss before the year’s end; in total, about $101 million in realized losses came from selling assets. $75.5 million in unrealized losses came from holding assets as they depreciated in value for four quarters straight. Only $8.5 million loss was attributed to unrealized losses on untimely investments into blockchain and cryptocurrency companies. Losses on operating costs were surprisingly high at $88.4 million, as the fund-still in its first year-was bleeding financially like most funds and retail investors.
In total, for all of 2018, Novagratz’s fund netted a loss of $272.7 million. The global market cap from January 2018 to 2019 declined from roughly $800 billion to $120 billion-funds across the board reported massive losses.
The fund held more than 9.7K BTC, 92.5K ETH, 4mil EOS, and 60K XMR at the height of the market. For the riskier mid to low market cap assets, Galaxy Digital at one point held $50.2 million worth of Wax, $17.4 million of BlockV, exceeding its dollar value holdings than the safer, traditional assets like Bitcoin. In the end, various altcoins proved to be very costly investments: Wax at a $47 million loss, BlockV at a $17.2 million loss, Kin at a $10.9 million loss, and Aion at a $8.6 million loss. Surprisingly, however, it was the larger marketcap assets that netted higher losses with Bitcoin at $70.3 million and Ethereum at $64.4 million, as they liquidated their altcoins to increase their BTC and ETH holdings.
$54.3 million of net profit was reported for some altcoins, although Galaxy Digital did not specify which ones.
Galaxy Digital was not only investing in digital assets, but also into startups and other funds. Novogratz’s fund posted large net losses from its investment in the Pantera ICO Fund, a $14.1 million mistake, $11.3 million on its gamble on the Hut 8 Mining Corp, and $11.1 million on Xapo, a crypto wallet startup.
Not all investments turned out to be a disaster; Galaxy Digital invested $41.9 million into Block.One, and $23.8 million into Ripple Labs, which partly offset the net loss produced by Hut 8 and Pantera ICO. Other notable investments include Bitfury, BitGo, Bakkt, and one in particular, Cryptology Asset Group, which turned out to be a clear winner.
Mike Novogratz, the CEO and owner of more than 71% of Galaxy Digital, is still bullish on the blockchain industry-as most of those involved are. In an interview with Laura Shin of the Unchained Podcast, Novogratz made it clear that “the herd [was] coming,” referring to big institutional money entering the market. As a high profile and well regarded member in both the blockchain and finance space, there is an immense pressure for Galaxy Digital and many eyes are watching-financial regulators included. It should also be noted that Novogratz has contributed an immense amount of support and funding into “legitimizing” the blockchain industry through several projects which include custodial, onboarding, and compliance services. Despite the longest crypto winter in history, the industry is still charging forward strong and fast, and it’s people like Mr. Novogratz that are true warriors taking the lead-and for that, my respect for Mr. Novogratz has deepened even further and solidified.
Also published on Medium.