Mike Novogratz, a former Goldman Sachs partner and founder and CEO of Galaxy Digital , a cryptocurrency merchant bank, is reportedly raising at least $250 million for a loan fund aimed at helping struggling cryptocurrency firms. Novogratz’s outfit already lends to cryptocurrency businesses using its own balance sheet.
The objective is to raise funds in order to provide loans to crypto companies who are finding it difficult to manage during the bear market. The fund is part of the firm’s asset management unit. Many crypto companies raised money via initial coin offerings (ICOs), an ether-based way to raise funds by issuing a token, but as the price of ether dropped, so too have the coffers of a number of these firms. Cryptocurrency miners, who rely on high prices to maintain profitability, have been among those hit the hardest. Lenders to these crypto companies have obviously seen a spike in demand for what they are offering.
$250 Million Loan Fund By Galaxy Digital Only Used If Collateral In Place
To get a loan, companies will have to provide Galaxy Digital with collateral and this could include crypto, property and mining rigs.
The company, which has its headquarters in New York, went public in August 2018 after a merger with a shell company listed on the Toronto junior exchange via a reverse takeover. It was one of the first ever public cryptocurrency focused merchant banks.
Galaxy Digital has also backed cryptocurrency-lending startups through its investment firm Galaxy Digital Ventures, leading a $52.5 million fundraiser for New York-based startup BlockFi last year. BlockFi which launched its first cryptocurrency-backed lending product in 2018 has seen its revenues grow tenfold since June, according to BlockFi’s CEO, Zac Prince.
Although a spokeswoman for Galaxy declined to comment on the fund, people close to the matter have said that Galaxy will close the first round of fundraising in March.