[2019-01-28] Galaxy Digital Seeks $250M To Fund Crypto-Collateralized Loans

[ruthbabe]

Reports indicate that Galaxy Digital is looking to raise $250 million to fund loans to cryptocurrency companies.

CRYPTOCURRENCY BANK SET FOR FUNDRAISING ROUND

According to Business Insider, the cryptocurrency bank wants to offer cryptocurrency-collateralized US dollar loans to companies operating in the industry. Anonymous sources reportedly familiar with the project say Galaxy will accept crypto-assets as well as mining hardware as collateral for the loans.

The reports also indicate that Galaxy Digital will close the first round of fundraising for the project in March 2019. Sources say the bank’s asset management arm will be responsible for offering the loans to cryptocurrency firms.

The move represents a continued expansion of the crypto bank into the crypto lending market. Galaxy Digital already offers loans to cryptocurrency firms from its balance sheet.

CRYPTO LENDING GROWING IN POPULARITY

This announcement though unconfirmed comes at a time when crypto lending appears to be gaining in popularity. The 2018 bear market appears to have left startups cash-strapped an in need of capital infusion thus providing market opportunities for loan providers.

BlockFi, a Galaxy-backed crypto lending platform reportedly saw its revenue and customer base grow ten-fold. Salt Lending, another company operating in the crypto lending arena is also reportedly planning to expand its workforce based on its increasing revenue stream.

Earlier in the year, Bitcoinist reported that crypto lending firms are enjoying significant success by catering to both sides of the trade.

GALAXY DIGITAL PUSHING ON DESPITE BEAR MARKET

Galaxy Digital like the rest of the market endured a difficult 2018, with its prolonged bear market. Company founder and former Goldman Sachs executive, Mike Novogratz commented last November on the difficulty of building a successful business during a bear run.

Back in November 2018, the company announced a net loss in Q3 2018 to the tune of $76.65 million. According to reports at the time, this figure put the bank’s total 2018 loss as at September 2018 ending to over $175 million.

Even with poor financial performance, the bank continues to invest in businesses across the industry. Last week, Bitcoinist reported that Galaxy Digital participated in the $20 million Series B fundraising round for blockchain startup firm Symbiont that’s looking to bridge the gap between capital markets and cryptocurrencies.

Source:  BITCOINIST

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[Theb]

They are really threading the needle on this one, I'm surprised that their company even survived the bear market especially when the whole industry suffered losses. Businesses like this one that relies on other company's success in order for them to pay back loans are really affected they incurred a big loss already and we are still in a middle of the bear market making it more impossible to raise up more funds.  If they survive and become successful in this business they will be the first choice of crypto-companies when it comes to taking up loans but if they fail they will wish to be a normal bank instead where they could offer up normal loans to other people not related to the industry.

[squatter]

They are really threading the needle on this one, I'm surprised that their company even survived the bear market especially when the whole industry suffered losses.

It probably helps that the firm is backed by a billionaire (Michael Novogratz) whose optimism about the cryptocurrency market apparently knows no end.

Anonymous sources reportedly familiar with the project say Galaxy will accept crypto-assets as well as mining hardware as collateral for the loans.

This seems like an odd choice unless we're talking about very short term loans. Crypto-assets can be liquidated on a variety of exchanges and OTC markets when prices bring collateral near loan value. How easy is that to do with depreciating mining hardware?

[elda34b]

Seems like lending will be the new market to be penetrated by institutional investors. There's already several ICO aiming to tackle the problems there though, such as BridgeX, Ethlend etc. Not sure how they will compete but pretty sure it will provide more competition.

But seriously, do we really need $250m for this project? Looks like big players are throwing around money here and there with the aim to find the next hectocorn.

[figmentofmyass]

Seems like lending will be the new market to be penetrated by institutional investors. There's already several ICO aiming to tackle the problems there though, such as BridgeX, Ethlend etc. Not sure how they will compete but pretty sure it will provide more competition.

But seriously, do we really need $250m for this project? Looks like big players are throwing around money here and there with the aim to find the next hectocorn.

$250m in funding would definitely set them apart from most piddling ICOs. plus, they need lending liquidity, don't they? they're planning to fork over millions of USD in crypto-backed loans.

i like novogratz, but he's sort of a bulltard about the future of the crypto economy. his expectations are a bit pie-in-the-sky. i honestly think angel investment is a much better route---high risk but extremely high reward when you've got equity in a groundbreaking company. i'm not sure what the margins are in this sector, but i'm guessing the payoff isn't nearly as high (and they need to custody lots of crypto for outstanding loans).

part of me wonders if novogratz is just looking for ways to keep funding companies where he's an equity/token bagholder………

[davis196]

All the investors that will fund Galaxy Digital (if there's any) must be insane.
The crypto loan business model already failed with all the small peer-to-peer crypto loan platforms and now,Novogratz wants to make crypto loans B2B.

[figmentofmyass]

All the investors that will fund Galaxy Digital (if there's any) must be insane.
The crypto loan business model already failed with all the small peer-to-peer crypto loan platforms and now,Novogratz wants to make crypto loans B2B.

i wouldn't write off the entire model of crypto-backed loans. the early platforms left much to be desired in terms of liquidity, security, enforceability around defaults, and other issues. b2b might actually be a superior model for monetizing lending---the overall volume of the market could theoretically be much larger than p2p.

i think it's a bad idea and the odds are against galaxy, but there's definitely a chance of success. i guess that's what startup lending is all about: taking big risks for unlikely but massive rewards.

[btyco]

The bank that made a huge loss was simply doing the wrong type of business at the wrong time. Doing loans when prices are falling will result in major losses. Loaning now is a good business because the new startups could profit in terms of higher quantities of collected funds, followed by capital appreciation in terms of value

[Daltonik]

Today, Mike Novogratz's company Galaxy Digital submitted an application to launch a bitcoin based exchange traded fund (ETF) https://www.sec.gov/Archives/edgar/data/1855781/000095010321005427/dp149207_s1.htm

[Streets 2.0]

The success of this adventure will be ensured by the growth in the capitalization of the bitcoin market and the upward trend in the price of it. If the market turns around there can be no question of success in this. But we can see success if everything remains at least as it is today. Competition is a very good factor especially for those who will expect to get these loans and credits. It is also great that the equipment will also be secured, because this is essentially a real sector of the crypto-economy and their project can take off and gain popularity in many parts of the world.

[InvoKing]

Today, Mike Novogratz's company Galaxy Digital submitted an application to launch a bitcoin based exchange traded fund (ETF) https://www.sec.gov/Archives/edgar/data/1855781/000095010321005427/dp149207_s1.htm

Do not necro an old topic and create a new one.