Merchant Bank Galaxy Digital is Raising $250M Credit Fund for Crypto Startups

https://www.reuters.com

Galaxy Digital Holdings, the crypto asset merchant bank launched by Bitcoin King Mike Novogratz, is reportedly raising at least $250 million to offer loans to crypto startups looking to finance their ventures, Business Insider reported January 25.

Citing people privy to the matter, the report explained that the fundraising initiative will grant fiat loans to crypto firms, with its collateral secured either with digital assets, real property, or crypto mining hardware.

While the firm has yet to issue an official statement, according to Business Insider’s undisclosed sources, Galaxy Digital’s first funding round is reportedly expected to be completed by March this year.

As it stands, this would not be the first time Novogratz’ merchant bank has led fundraising initiatives for crypto ventures. In July last year, Galaxy Digital has also raised over $52 million through its investment subsidiary for New York-based crypto lending firm BlockFi.

As the year-long bearish trend across crypto markets persists, with Bitcoin on the brink of losing 90% of its value along with other leading digital currencies, while major crypto mining firms including Bitmain are forced to cease operations, the number of crypto startups in dire need of funding has also seen an exponential rise.

On top of the significantly increasing number of crypto firms either downsizing or shutting down, the ICO sector has also seen a massive decline in funds raised through token sales.

With the crypto markets’ year-long price collapse dragging down nearly the entire crypto industry, demands for financial loans such as that offered by Galaxy Digital have also seen a significant surge, particularly among HODLers and crypto miners looking to compensate their losses without resorting to asset liquidation.

Since the platform’s launch in 2018, BlockFi has seen a 10-fold increase in generated revenue, according to the company’s CEO Zac Prince. Despite the crypto markets’ abysmal crash, BlockFi is still pushing forward with its plans to diversify its product line, including providing clients a savings account that would allow them to earn interest on their crypto stakes.

BlockFi is not the only crypto lending firm that has seen a rise in demand as a byproduct of the crypto markets’ current dismal condition. This month, Salt Lending has also instituted a mass hiring, as it adds 85 new employees to its workforce, with plans of further expanding its human resources by 25 percent to address the demand for the company’s services.

Like many other crypto-related firms, Galaxy Digital is also looking to multiply its revenue to cover the financial losses the company had incurred last year. In the first nine months of 2018, the merchant bank had lost nearly $136 million from bad investments in Bitcoin, Ether, as well as XRP.

As Galaxy Digital stated in a filing cited in a previous Bloomberg Quint report:

“While we continue to improve and strengthen our trading business, lack of overall trading volume in cryptocurrencies has been a headwind.