Digital asset and blockchain firm Galaxy Digital has an exposure of about $76.8 million of cash and digital assets to cryptocurrency exchange FTX and is in the process of withdrawing $47.5 million, the company announced Wednesday (Nov. 9) in a quarterly earnings press release issued before its conference call.
The announcement came a day after FTX CEO Sam-Bankman Fried said in a tweet thread that FTX had come to an agreement on a strategic transaction with crypto exchange Binance for FTX.com after asking Binance to come in to clear out its liquidity crunches.
Similarly, Changpeng Zhao, founder and CEO of Binance, tweeted Tuesday (Nov. 8) that FTX had asked for help with a “significant liquidity crunch” and that Binance intends to acquire the firm.
Galaxy Digital Founder and CEO Mike Novogratz opened the company’s Wednesday earnings call by addressing the situation and its exposure.
“In some ways, this is the year where the bad news in crypto has just kept coming,” Novogratz said.
Regarding the exposure, he said Galaxy trades on all major exchanges, had begun taking risk at FTX down Sunday (Nov. 6) night, and had reduced its risk on the exchange by about half.
He also noted that the exposure equals only about 4% of Galaxy’s capital and 2% of its assets.
“So, while it stings, it’s by no means that detrimental,” Novogratz said.
Speaking of the events and their impact on the crypto industry, he said, “It leaves me angry and frustrated but resolved that Galaxy has a role to play, and a very good role to play, as a strong, transparent, smart, risk-manage-focused institution.”
The announcement came as Galaxy revealed in the release it had a net comprehensive loss of $68.1 million for the quarter ended Sept. 30 but retained $1.5 billion in liquidity.
“While our industry continues to face macroeconomic headwinds and structural evolution, Galaxy remains focused on building for the future state of institutional adoption by taking deliberate steps to transform and simplify our operations,” Novogratz said in the release.
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