Billionaire Mike Novogratz Takes Another Hit: First Luna, Now FTX Is Costing His Crypto Firm Millions

Zinger Key Points
  • Galaxy Digital Holdings reveals an exposure of $77 million in FTX, $47.5 million stuck in withdrawals.
  • Amber Group denies having any exposure to FTT or Alameda Research.
  • FTX Ventures and Alameda Research websites go offline.

In a startling revelation amid the fiasco surrounding FTX, Galaxy Digital Holdings Ltd BRPHF revealed it has a $76.8 million exposure to the beleaguered cryptocurrency exchange, out of which $47.5 million is currently being withdrawn.

It already hasn't been a great 2022 for Galaxy and its CEO Mike Novogratz. Galaxy Digital was an early backer of Terra and its cryptocurrency Luna and algorithmic stablecoin TerraUSD, both of which collapsed earlier this year.

Novogratz also got a Luna-themed wolf tattoo on his arm just prior to the crypto's meltdown.

In the company’s quarterly earnings call on Nov. 9, Galaxy Digital reported its exposure to FTX is made up of cash and digital assets.

The cryptocurrency exchange had on Tuesday announced the ceasing of all withdrawals due to a liquidity crisis brought on by a consumer bank run and a catastrophic price collapse in its native FTX Token FTT/USD, which the exchange utilizes as collateral.

Galaxy Digital Claimed To Have $1.5 Billion In Liquidity

Galaxy Digital claimed to have $1.5 billion in liquidity, including $1.0 billion in cash and an additional $235.8 million in stablecoins to avert losses despite its exposure to the company, which is led by Sam Bankman-Fried.

Related Link: Crypto's White Knight Needs A White Knight: Could The FTX/CZ Drama Be Sam Bankman-Fried's Fall From Grace? 

The company's partner capital decreased by 12% year-over-year to $1.8 billion over the three months that ended on Sept. 30, citing a dropping cryptocurrency market capitalization as a factor.

The main sources of income for Galaxy Digital include advising fees, management fees, lending income, mining income and changes in the fair value of derivatives and investments.

The company's third-quarter revenue decreased by 84.9% year over year to $32.7 million.

Also Read: Binance Could Back Out Of FTX Buyout, New Report Says; Bitcoin Breaks $17K Level

This was brought on by significantly lower levels of capital investment earnings compared to the same time last year.

Galaxy Digital To List On Nasdaq In 2023

The company stated that it intended to finish its reorganization and switch from the Canadian Toronto Stock Market to the American Nasdaq exchange in 2023 and that Damian Vanderwilt, the company's co-president, will resign and become a board member as of mid-January 2023.

The company used some of its capital from May 16 to Oct. 24 to repurchase its outstanding shares for about $52 million.

Amber Group Says No Exposure to FTT or Alameda

Meanwhile, although Amber Group claimed to have no exposure to Alameda Research or FTT, it has been a frequent trader on FTX, and less than 10% of its total trading capital is invested there.

The digital asset company wrote on Twitter, “While we have significantly reduced our exposure over the course of the week, we still have withdrawals that have yet to be processed. It does not pose a threat to our business operations or liquidity."

Websites For FTX Ventures and Alameda Research Go Offline  

Notably, two websites associated with the Bahamas-based cryptocurrency exchange FTX have gone silent.

Since yesterday, both the websites for FTX Ventures, the venture capital division of FTX, and Alameda Research, the quantitative trading company established by FTX CEO Bankman-Fried, have been taken down or made private.

Read Next: U.S. Regulators Are Investigating FTX Lending, Handling Of Client Funds: Report

Photo: Acumen Fund via Flickr Creative Commons

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Posted In: CryptocurrencyNewsPenny StocksSmall CapTop StoriesMarketsAlameda ResearchAmber GroupFTXGalaxy Digital HoldingsLunaMike NovogratzSam Bankman-FriedTerraUSD
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