Galaxy Digital Reveals $76.8 Million Exposure to FTX


American digital asset and blockchain leader, Galaxy Digital in its financial reports for the third quarter has revealed an exposure of about $76.8 million in cash and cryptocurrencies to now troubled FTX.

According to the report, Galaxy Digital will significantly lower this exposure to about 38% as it is currently in the process of withdrawing $47.5 million of the said sum. However, there is no mention of how long the withdrawal process will take or whether or not it could be completed. 

Galaxy’s exposure to FTX is only directly through its balance, it has no exposure to the FTT token as collateral for its lending business. The firm also suffered a net comprehensive loss of $68.1 million at the end of the third quarter which is a huge contrast to the $517.9 million in profit it posted in the same period last year.

Despite its level of exposure to the FTT tokens and the loss posted in the third quarter, Michael Novogratz, CEO, and Founder of Galaxy Digital is confident that the firm is properly positioned to take on any upcoming volatility. The company holds $1.5 billion in liquidity which comprises over $1 billion in cash.

Additionally, Damien Vanderwilt will be vacating his post as co-president and Head of Global Markets of the firm to now occupy a Senior Advisor and Board Director role beginning in January 2023.

Meanwhile, Galaxy Digital earlier said it is considering laying off 20% of its workforce as the crypto winter lingers. Should it carry out this plan, Galaxy Digital will join the league of industries that resulted in downsizing to maintain a healthy balance sheet. Just recently NYDIG laid off 33% of its workforce while trying to rebalance its operating cost.

FTX suffers a Liquidity Crisis

FTX appeared to have run into liquidity troubles after a tweet from Binance CEO Changpeng Zhao revealed that the exchange will be trading its remaining FTT tokens after concerns were raised about Alameda’s balance sheet.

Furthermore, Zhao recently shared some lessons from the events leading to FTX’s crisis. Zhao advised against crypto firms borrowing to keep a large reserve and also using a native token as collateral.

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