Galaxy Digital Plans Major Fundraising
Mike Novogratz’s crypto merchant bank, Galaxy Digital, is reportedly gearing up to raise a staggering $250 million dedicated to offering loans to crypto-related firms. This unconfirmed news, first reported by Business Insider on January 23, suggests that the aim is to close the initial funding round for its crypto credit fund by March. If this plays out as intended, it could reshape the lending landscape for crypto businesses.
What’s On Offer for Lenders?
According to two unnamed sources familiar with Galaxy’s plans, the lending structure will allow these businesses to secure loans against a diverse range of deposits. This includes crypto assets, real estate, and even crypto mining hardware. It’s like a pawn shop, but for your digital gold. What do you think would happen next? An asset backed by your favorite meme coin? Crazy times ahead!
The Demand for Crypto Lending Services
Why is Galaxy moving into this space? Well, they’ve observed a significant uptick in demand for crypto lending services, particularly following the tumultuous bear market of 2018. It turns out that when things get tough, the tough turn to loans. It seems many companies are still navigating the financial wreckage left in the wake of the last crypto market collapse.
Galaxy’s Previous Investments and Lending
Founded by ex-Goldman Sachs partner Michael Novogratz, Galaxy Digital isn’t a stranger to the lending game. Previously, they have lent to crypto businesses using their own balance sheet. Moreover, they’ve also led a $52 million fundraising round through Galaxy Digital Ventures to support the crypto-lending firm BlockFi back in July 2018. It’s almost like they’re playing Monopoly, but instead of Boardwalk, they’re aiming for the crypto equivalent.
Market Resilience Amid Challenges
Even with the significant challenges faced by the crypto industry, particularly in 2018, where 340 companies in the UK alone were dissolved or liquidated, the crypto lending segment appears to be thriving. For instance, BlockFi’s lending product has skyrocketed, revealing a tenfold revenue increase since June, according to BlockFi CEO Zac Prince. Additionally, Salt Lending issued $54 million in loans by the end of 2018 and is eyeing a 25 percent expansion in its team. Talk about resilience in a wild west market!
Novogratz’s Growing Stake in Galaxy
In a show of confidence, Novogratz himself has increased his stakes in the company to an impressive 79.3 percent of ordinary shares. That’s like putting all your chips on black at the roulette table. Assuming full conversion, this amounts to around 221.2 million ordinary shares, showcasing his commitment to the future of Galaxy Digital and the potential resurgence of the crypto market.
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