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Galaxy Digital Announces First Quarter 2019 Financial Results and Provides Corporate Updates

All figures are in U.S. Dollars unless otherwise noted.

NEW YORK, May 29, 2019 /CNW/ - Galaxy Digital Holdings Ltd. (TSXV: GLXY; Frankfurt: 7LX) ("Galaxy Digital", "GDH Ltd.", or the "Company") today released both Galaxy Digital Holdings LP's ("GDH LP" or the "Partnership") and GDH Ltd.'s financial results for the three months ended March 31, 2019 ("Q1 2019" or "the first quarter"), as well as the Partnership's corporate updates through the date of this press release.

"I am very pleased with our first quarter results and the progress we continue to make in building out and diversifying our business in a smart and disciplined manner. Notably, our digital assets portfolio significantly outperformed broader markets. As we previously announced, after the end of the first quarter, our Principal Investments team successfully monetized a portion of our largest position, generating significant and flexible liquidity for the firm as we go forward," said Michael Novogratz, Founder and CEO of Galaxy Digital. "We are excited about the future prospects for the sector and continue to be singularly focused on bringing greater institutionalization and growth to the digital assets and blockchain technology ecosystem. As the landscape continues to evolve, I am confident that our platform remains well-positioned to identify and invest in new and unique opportunities as they emerge."

Corporate Highlights

  • As previously disclosed on April 18, 2019 the Partnership accepted a tender offer in the ordinary shares of Block.one. On May 20, 2019, the transaction closed and the Partnership received $71.2 million for the tendered shares, representing a majority of the Company's position and a 123% return on the realized investment.
  • During the first quarter of 2019, the Principal Investments team closed three new investments and two add-on investments, representing $6.1 million and $1.0 million of invested capital, respectively. These investments included:
  • Since the start of 2019, GDCM has been capitalizing on the improvement in the digital assets market, generating inflows into the Galaxy Benchmark Crypto Index Fund (the "GBCIF") and making meaningful progress towards future commitments. The GBCIF is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"), an index co-branded and administered by Bloomberg which is designed to track the performance of the largest, most liquid portion of the digital assets market. In the first quarter, the BGCI returned 7.96%. Year-to-date, the BGCI has returned 99.48%1.
  • Additionally, in the first quarter of 2019, the Galaxy EOS VC Fund, LP (the "EOS VC Fund"), made investments in Lucid Sight, Inc., Ciphertrace, Inc., and Digital Assets Data Inc. Subsequent to March 31, 2019, the EOS VC Fund made additional investments in Out There Labs, Inc., Azarus, Inc., FinCo Services, Inc., and an add-on investment in AlphaPoint Corporation.
  • Galaxy Digital Trading ("GDT"), the Partnership's trading business, continued to see counterparty engagement acceleration in the first quarter of 2019. This engagement was led from Asia and the U.S., with Europe progressing forward at a measured pace.
  • During the first quarter of 2019, the Advisory Services business added key hires and has made significant progress, with several active mandates for clients across financing, mergers and acquisitions, and other strategic matters.


_________________________

1

Data as of market close on May 28th, 2019. Source: Bloomberg.

 

Select GDH LP Financial Highlights (Q1 2019)

  • As of March 31, 2019, digital assets, including digital assets posted as collateral, stood at $94.7 million, an increase from $69.8 million as of December 31, 2018. This increase was primarily due to additional purchases during the quarter.
  • Investments increased from $179.4 million to $202.2 million as of March 31, 2019. The increase was primarily a result of $16.9 million of unrealized gain during the quarter as well as $6.6 million of capital deployed by the Principal Investments team.
  • Total equity increased by $19.7 million during the quarter to $325.4 million as of March 31, 2019 primarily due to $12.9 million of net comprehensive income and further increased by $10.3 million of equity-based compensation which does not have a net effect on equity due to the accounting treatment for equity-based compensation.
  • As of March 31, 2019, the Partnership's net book value per unit2 was approximately C$1.51 (US$1.13).
  • For the three months ended March 31, 2019, net comprehensive income was $12.9 million, as compared to net comprehensive loss of $134.0 million for the three months ended March 31, 2018. The current quarter income was largely a result of realized gain on digital assets and unrealized gain on investments, partially offset by the quarter's operating expenses. The net comprehensive loss for the three months ended March 31, 2018 was primarily a result of unrealized loss on digital assets and investments and realized loss on digital assets.


_________________________

 2

Net book value per unit is calculated as GDH LP's partners' capital divided by the outstanding number of units as of March 31, 2019.

 

GDH LP's Q1 2019 Financial Results


March 31,


December 31,


2019


2018

Assets




Current assets




Cash

$

29,869,182


$

66,488,012

Digital assets

90,576,823


69,765,339

Investments

202,183,869


179,365,696

Receivable for digital asset trades

2,630,364


8,579,058

Digital asset loans receivable

2,960,643


Assets posted as collateral

5,885,362


Receivables

1,336,281


1,238,694

Prepaid expenses and other assets

1,827,955


2,002,880

Loans receivable

1,653,326


2,369,024


338,923,805


329,808,703





Loans receivable

15,920,316


15,892,320

Property and equipment

8,759,084


4,223,252


24,679,400


20,115,572

Total assets

$

363,603,205


$

349,924,275





Liabilities




Current liabilities




Digital assets sold short

$

19,053,551


$

18,666,957

Accounts payable and accrued liabilities

6,810,258


14,558,914

Payable for digital asset trades

3,441,641


9,832,737

Digital asset loans payable

2,960,643


Collateral payable

1,172,015


Lease liability

711,254


Due to related party


1,177,498


34,149,362


44,236,106





Lease Liability

4,053,626


Total liabilities

38,202,988


44,236,106





Equity




Partners' capital

321,053,515


301,520,591

Non-controlling interest

4,346,702


4,167,578

Total equity

325,400,217


305,688,169





Total liabilities and equity

$

363,603,205


$

349,924,275

 


Three months


Three months


ended


ended


March 31,


March 31,


2019


 20183

Income (loss)




Advisory and management fees

$

1,520,511


$

29,911

Net realized gain (loss) on digital assets

17,471,124


(13,526,843)

Interest income

705,763


925

Other income

608,996


19,822


20,306,394


(13,476,185)

Operating expenses




Equity based compensation

10,321,503


Compensation and compensation related

6,954,165


6,307,582

Professional fees

2,605,326


1,774,900

General and administrative

2,521,290


1,472,623

Interest

688,326


658,754

Insurance

426,850


735,000

Director fees

50,000



(23,567,460)


(10,948,859)





Net unrealized loss on digital assets

(664,530)


(85,540,413)

Net unrealized gain (loss) on investments

16,902,771


(24,038,136)

Unrealized foreign currency gain

91,072


Realized foreign currency loss

(110,512)



16,218,801


(109,578,549)





Income (loss) for the period

$

12,957,735


$

(134,003,593)





Income (loss) attributed to:




Unit holders of the Partnership

12,570,628


(134,003,593)

Non-controlling interest

387,107



$

12,957,735


$

(134,003,593)

Other comprehensive loss




Foreign currency translation adjustment

(92,934)






Comprehensive income (loss) for the period

$

12,864,801


$

(134,003,593)





Comprehensive income (loss) attributed to:




Unit holders of the Partnership

$

12,477,694


$

(134,003,593)

Non-controlling interest

387,107



$

12,864,801


$

(134,003,593)

 

_________________________

  3

Certain prior period balances were restated to conform to current period's presentation. There were no changes to the balances

 

Income and expenses by each reportable segment of GDH LP for the three months ended March 31, 2019 are as follows:




Principal


Asset


Advisory


Corporate




Trading


Investing


Management


Services


and Other


Totals

Income (loss)












Advisory and management fees

$


$


$

1,317,386


$

203,125


$


$

1,520,511

Net realized gain on digital assets

1,821,249


15,649,875





17,471,124

Interest Income

65,314


610,627



16,524


13,298


705,763

Other Income

612,714


(7,694)



3,976



608,996


2,499,277


16,252,808


1,317,386


223,625


13,298


20,306,394













Operating expenses

4,733,601


2,888,993


6,146,240


3,392,232


6,406,394


23,567,460













Net unrealized loss on digital assets

(329,352)


(335,178)





(664,530)

Net unrealized gain on investments


16,902,771





16,902,771

Unrealized foreign currency gain (loss)

104,146




(13,074)



91,072

Realized foreign currency loss

(110,512)






(110,512)


(335,718)


16,567,593



(13,074)



16,218,801













Net income (loss)

$

(2,570,042)


$

29,931,408


$

(4,828,854)


$

(3,181,681)


$

(6,393,096)


$

12,957,735

 

Income and expenses by each reportable segment of GDH LP for the three months ended March 31, 2018 are as follows:




Principal


Asset


Advisory


Corporate




Trading


Investing


Management


Services


and Other


Totals

Income (loss)












Advisory and management fees

$


$


$

19,444


$

10,467


$


$

29,911

Net realized loss on digital assets

(8,942,905)


(4,583,938)





(13,526,843)

Interest income


925





925

Other income

5,162


14,660





19,822


(8,937,743)


(4,568,353)


19,444


10,467



(13,476,185)













Operating expenses

2,888,682


1,527,666


1,033,355


459,113


5,040,043


10,948,859













Net unrealized gain (loss) on digital assets

12,383,401


(97,923,814)





(85,540,413)

Net unrealized loss on investments


(24,038,136)





(24,038,136)


12,383,401


(121,961,950)





(109,578,549)













Net income (loss)

$

556,976


$

(128,057,969)


$

(1,013,911)


$

(448,646)


$

(5,040,043)


$

(134,003,593)

 

Assets and liabilities by reportable segment of GDH LP as of March 31, 2019 are as follows:




Principal


Asset


Advisory


Corporate




Trading


Investing


Management


Services


and Other


Totals

Total assets

$

40,754,604


$

309,963,542


$

849,690


$

945,452


$

11,089,917


$

363,603,205













Total liabilities

$

7,439,559


$

19,756,002


$

702,128


$

13,227


$

10,292,072


$

38,202,988

 

Assets and liabilities by reportable segment of GDH LP as of December 31, 2018 are as follows:



Principal

Asset

Advisory

Corporate



Trading

Investing

Management

Services

and Other

Totals

Total assets

$

65,520,661


$

265,533,063


$

2,427,877


$

1,081,640


$

15,361,034


$

349,924,275








Total liabilities

$

9,946,848


$

18,936,146


$

105,946


$

157,811


$

15,089,355


$

44,236,106

 

Select statement of financial position information

The fair value of each asset class by reporting segment of GDH LP as of March 31, 2019 is as follows:




Principal


Asset


Advisory


Corporate




Trading


Investing


Management


Services


and Other


Totals

Digital assets:











Cryptocurrency

$

7,969,162


$

82,607,661


$


$


$


$

90,576,823

Digital assets posted as collateral

339,064


3,728,180





4,067,244

Investments:












Pre-ICO


2,844,204





2,844,204

Convertible Notes


1,250,000





1,250,000

Preferred Stock


65,609,037





65,609,037

Common Stock


97,211,965





97,211,965

LP/LLC Interests


34,827,530





34,827,530

Warrants/Trust Units


441,133





441,133


$

8,308,226


$

288,519,710


$


$


$


$

296,827,936

 

The fair value of each asset class by reporting segment of GDH LP as of December 31, 2018 is as follows:




Principal


Asset


Advisory


Corporate




Trading


Investing


Management


Services


and Other


Totals

Digital assets:












Cryptocurrency

$

20,920,345


$

48,844,994


$


$


$


$

69,765,339

Investments:












Pre-ICO


3,444,204





3,444,204

Convertible Notes


1,250,000





1,250,000

Preferred Stock


59,586,719





59,586,719

Common Stock


80,483,775





80,483,775

LP/LLC Interests


33,248,472





33,248,472

Warrants/Trust Units


1,352,526





1,352,526


$

20,920,345


$

228,210,690


$


$


$


$

249,131,035

 

This press release should be read in conjunction with (i) GDH LP's Management Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2019 and (ii) GDH Ltd.'s Management Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2019 (together, the "Consolidated Financial Statements" and "MD&As"), which have been filed on SEDAR at www.sedar.com.

About GDH Ltd. and GDH LP (Galaxy Digital)

Galaxy Digital Holdings Ltd.'s only significant asset is a minority investment in GDH LP. GDH LP is a diversified, multi-service merchant bank dedicated to the digital assets and blockchain technology industry. GDH LP's multi-disciplinary team has extensive experience spanning investing, portfolio management, capital markets, operations, and blockchain technology. GDH LP currently operates four distinct business lines, which include: Trading, Asset Management, Principal Investing and Advisory Services. The CEO of GDH Ltd. and the general partner of GDH LP is Michael Novogratz. GDH LP is headquartered in New York City, with offices in London, Tokyo, Hong Kong, the Cayman Islands (registered office) and New Jersey. Additional information about GDH LP's businesses and products is available on www.galaxydigital.io.

Disclaimers and Additional Information

The TSXV has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy Digital.

Forward-Looking Statements

Certain information in this press release, including, but not limited to, statements regarding the future of the industry and our results, business or opportunities, may constitute forward looking information (collectively, forward-looking statements), which can be identified by the use of terms such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" (or the negatives) or other similar variations. Because of various risks and uncertainties, including those referenced below, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Factors that could cause actual results to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market; the failure or delay in the adoption of digital assets and the blockchain ecosystem by institutions; a delay or failure in developing infrastructure for the trading business or achieving mandates for the advisory business and those risks discussed in the risks and uncertainties section in the Partnership's and the Company's Management Discussion and Analysis for the year ended December 31, 2018. In connection with the forward-looking statements contained in this press release, the Company has made assumptions that no significant events occur outside of the Company's and Partnership's normal course of business. Forward-looking statements are not guarantees of future performance, accordingly, you should not put undue reliance on forward-looking statements. Information identifying assumptions, risks and uncertainties relating to Galaxy Digital is contained in Galaxy Digital's filings with the Canadian securities regulators available at www.sedar.com. The forward-looking statements in this press release are applicable only as of the date of this release or as of the date specified in the relevant forward-looking statement.


SOURCE Galaxy Digital Holdings Ltd.


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