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Mike Novogratz’s Galaxy Digital Acquires Bankrupt Celsius

Author: Sohrab Khawas

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    Galaxy Digital (GLXY) CEO Mike Novogratz has won the auction to acquire the platform GK8 from the troubled cryptocurrency lender Celsius Network, the company announced on Friday.

    Novogratz said, “The acquisition of GK8 is a crucial cornerstone in our effort to create a truly full-service financial platform for digital assets, ensuring our clients will have the option to store their digital assets at or separate from Galaxy without compromising versatility and functionality”

    According to reports, Chris Ferraro, co-president of Galaxy, said that the company bought the assets for a lot less than the $115 million Celsius paid for them last year.

    GK8 is a platform for institutional self-custody of digital assets. As it develops GalaxyOne, a product that aims to offer trading, lending, cross-portfolio margining, and derivatives to institutional investors, Galaxy plans to employ the company’s custody solution.

    According to reports, Galaxy Digital stated during its third-quarter earnings call last month that it had $1.5 billion in liquidity, including $1 billion in cash, despite having about $77 million of exposure to the fallen cryptocurrency exchange FTX.

    As a result of the planned acquisition, a team of about 40 people will be added to Galaxy, which recently let go 14% of its workforce. Lior Lamesh, CEO of GK8, and Shahar Shamai, CTO of Galaxy, will oversee the company’s new custodial technologies division.

    A cascading failure of crypto companies

    In November 2021, Celsius and GK8 agreed to a $115 million purchase. After the sale, GK8 was to continue operating as a stand-alone company, although soon after, Celsius filed for bankruptcy. Retail and institutional investors are experiencing a nightmare that doesn’t seem to end: a string of cascading failures of crypto companies.  

    After the Terra collapse on May 9, the sector lost at least $55 billion. Significant cryptocurrency lenders like Celsius Network and Voyager had to declare bankruptcy as a result of their exposure to Luna and UST through 3AC, having a significant bearish influence on the sector.

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