Galaxy Digital raising $250 million to lend crypto firms
Cryptocurrency merchant bank Galaxy Digital Holdings is reportedly raising $250 million for a credit fund that will provide loans to cryptocurrency companies.
A Business Insider article cited “people familiar with the matter” as saying that the firms will be accepting cryptocurrencies, real estate, and mining equipment as collateral from borrowers.
Two of the news outlet’s sources said that Galaxy will be concluding a first round of fundraising by March.
Prior to this, Galaxy, through its investment company Galaxy Digital Ventures, already managed to raise $52.5 million for cryptocurrency lending company BlockFi last July. Blockfi, which operates in 42 U.S. states, was able to secure an additional $4 million last month.
The fundraising will be welcomed by numerous startups hoping to weather the yearlong downturn in the cryptocurrency market. Reports of losses, layoffs, and closures have been common, as businesses undergo a correction from the overspeculation of 2017.
Early this year, cryptocurrency exchange ShapeShift announced the laying off of 37 employees, or about one-third of company staff, after having grown 3,000% in 2017. The company has also succumbed to regulatory pressure, now requiring know-your-customer identification of users, in contrast to its reputation as an exchange without accounts.
Chinese mining giant Bitmain has had to shut down several operations around the globe, such as in Texas and Amsterdam, while reducing staff significantly. Its controversial Wormhole smart contract project is also said to have been abandoned.
Galaxy itself has had to deal with losses, which amounted to $76.65 million in the third quarter of 2018. For the year up to September, losses totaled $150.74 million.
CEO Mike Novogratz, however, has expressed optimism that this year, within the first two quarters, prices will bounce back. He’s even gone so far as to say that record-high prices will be reached within this time period.
To further back up his words, Novogratz bought an additional 7.5 million shares in his company last month, increasing his stake from 76.6% to 79.3%.
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