Galaxy Digital Holdings Ltd. (TSX: GLXY) today released financial results for the three and nine months ended September 30, 2020 for both itself and Galaxy Digital Holdings LP, as well as corporate updates through the date of this press release.

"Galaxy Digital made progress across our business lines in the third quarter, including record volumes in our Trading business," said Michael Novogratz, Founder and CEO of Galaxy Digital. "We've taken several key steps forward in the second half of 2020, including making critical senior hires, expanding our capital base, and completing strategic actions to position Galaxy Digital for the clear, incoming wave of institutional adoption ahead of digital assets and blockchain solutions by investors, corporates and governments."

Corporate Updates

• Galaxy Digital Holdings Ltd. (the "Company" or "GDH Ltd.") closing of private investment in public equity financing:
  • On November 12, 2020, GDH Ltd. closed a private investment in public equity financing ("PIPE") of $50 million of aggregate gross proceeds led by a group of institutional investors. Galaxy Digital Holdings LP (the "Partnership" or "GDH LP") intends to use the proceeds from the PIPE for general corporate and working capital purposes across its business lines, with a particular focus on growing its client financing business and seeding new asset management-related product offerings.
• Other corporate updates:
  • On September 29, 2020, Galaxy Digital announced the appointment of Damien Vanderwilt as its Co-President and Head of Global Markets. Vanderwilt joins Galaxy Digital from Goldman Sachs where he worked for 20 years, most recently as a Partner and Global Head of FICC Execution Services. He is expected to join Galaxy Digital in January 2021, working alongside fellow Co-President Christopher Ferraro. In addition, Rhonda Medina, Director of Business and Legal Affairs at Netflix, has been appointed to the Board of Managers of the general partner of the Partnership.
  • Also in September 2020, Amanda Fabiano joined Galaxy Digital as its first Head of Mining. Fabiano joined from Fidelity Investments, where she was previously the Director of Bitcoin Mining. She focused on mining, bitcoin products, and bitcoin education during her six-year tenure at the firm.
  • In October 2020, Michael Ashe joined Galaxy Digital as its new Head of Investment Banking. Ashe joined from Oppenheimer & Co. where he was a senior member of the Industrial & Emerging Technology Banking sector team since 2015.

Operating Highlights

• Galaxy Digital Trading ("GDT") delivered the best quarter in its history in the third quarter, with trading volume of approximately $1.4 billion in the period, and up 75%+ year over year. The increase in trading volume can be attributed to GDT's close management of its global counterparty base which grew by 30 new counterparties in the third quarter, the expanding roll out of its electronic trading platform, and the growth of its crypto derivatives business. GDT's momentum and market share gains have continued into October and November as Bitcoin approaches 2017 highs and its counterparties remain engaged and nimble. During the same period GDT's continued enhancements to its product suite have generated ongoing demand across its spot, lending, derivatives, and structured products businesses.
• As previously disclosed, Galaxy Digital Asset Management ("GDAM") had assets under management ("AUM") of $407.4 million at the end of the third quarter. AUM consisted of $82.4 million in GDAM's passive Bitcoin and Index fund products, and $325.0 million in the Galaxy EOS VC Fund.
  • Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the "Bitcoin Funds") offer institutional and accredited investors institutionally wrapped bitcoin exposure supported by vetted service providers, including Bakkt, and Fidelity Digital Assets as custodians for the funds, Bloomberg L.P. as pricing agent, Deloitte & Touche LLP for audit, and Ernst & Young LLP for tax. The Galaxy Bitcoin Funds track the Bloomberg CFIX pricing of bitcoin ("XBT"), and the XBT returned 17.3% in the third quarter of 2020 and has returned 125.7% on a year to date basis through November 12, 2020.
  • Galaxy Benchmark Crypto Index Fund LP (the "Index Fund") is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"), an index co-branded with and administered by Bloomberg which is designed to track the performance of the largest, most liquid portion of the digital asset market. The BGCI returned 32.3% in the third quarter of 2020 and has returned 126.7% on a year to date basis through November 12, 2020.
  • Galaxy Digital opened its Index fund to accredited investors and digitized its subscription process through a third-party platform, allowing for a more seamless subscription experience.
  • GDAM continues to leverage multiple sales and distribution channels, including a partnership with CAIS, an industry-leading alternative investment platform. Through CAIS's extensive Registered Investment Advisor network and sales team, GDAM continues to widen the potential investor base for its fund products.
  • Additionally, during the third quarter of 2020, the Galaxy Interactive team who manages the Galaxy EOS VC Fund (the "EOS Fund") made investments in Build a Rocket Boy, CoreLoop, ForeVR, GreenPark, Polyarc, Rings, Skystone, Stream Captain, Tilt Five and add-on investments in Big Run, CipherTrace, Bitski, Audigent, and vAtom.
• In the third quarter, Galaxy Digital Investment Banking continued to make progress on mandates for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.
  • In August 2020, Galaxy Digital Investment Banking served as sell-side advisor to Blockfolio on its announced sale to FTX Trading Limited for $150.0 million, which subsequently closed in October 2020. Blockfolio is a leading mobile app for cryptocurrency portfolio tracking and management, and has over 6 million users globally.
• Galaxy Digital launched a cryptocurrency mining practice strategically focused on providing innovative and sophisticated financial tools for North American miners. Galaxy Digital Mining is actively growing its pipeline of potential clients and partners.
• During the third quarter of 2020, the Principal Investments team closed six new and four follow-on investments, representing $7.5 million of invested capital.
  • Investments made during the third quarter bring capital deployed for the nine months ended September 30, 2020 to $27.4 million represented by 8 new investments and 13 follow-on investments.
  • Investments made (including loans purchased) from January 9, 2018 through September 30, 2020 total $208.9 million and are represented by 43 new and 43 follow-on investments.
  • Galaxy Digital invested in two of the most prominent DeFi, or Decentralized Finance, investment funds in the sector, ParaFi Capital and Robot Ventures.

Select GDH LP's Financial Highlights (Q3 2020)

• As of September 30, 2020, digital assets, including digital assets posted as collateral, stood at $241.6 million, an increase of $147.4 million from December 31, 2019. This increase was primarily due to the increase in the fair value of the digital assets during the period, as the prices of digital assets held by the Partnership increased, as well as an increase in the holdings of certain digital assets. The digital assets balance as of September 30, 2020 include $44.3 million held by non-controlling interests.
• As of September 30, 2020, the Partnership had a material holding in bitcoin of $176.4 million (December 31, 2019 - $81.3 million), which includes approximately $41.2 million held by non-controlling interests. As of November 12, 2020, the holding in bitcoin increased primarily due to contributions by non-controlling interests into the Bitcoin Funds.
• Investments stood at $200.7 million as of September 30, 2020, an increase of $42.5 million from December 31, 2019. The change was primarily due to $27.4 million of new capital deployed by the Principal Investments team during the period and an increase in unrealized gains, which were partially offset by the sale of some investments.
• Total equity increased by $90.5 million to $445.6 million for the nine months ended September 30, 2020 primarily due to $55.4 million of net comprehensive income.
• As of September 30, 2020, the Partnership's net book value1 per unit was approximately C$2.05 (US$1.54), compared to C$1.62 (US$1.24) as of December 31, 2019.
• For the three months ended September 30, 2020, net comprehensive income was $44.6 million, which primarily was a result of realized and unrealized gains on digital assets and on investments, partially offset by operating expenses. This compares to a net comprehensive loss of $68.2 million for the three months ended September 30, 2019, which was largely a result of an unrealized loss on digital assets and operating expenses. For the nine months ended September 30, 2020, net comprehensive income was $55.4 million, as compared to net comprehensive income of $58.4 million for the nine months ended September 30, 2019. The current year to date income was largely a result of realized and unrealized gains on digital assets and investments, partially offset by the year to date operating expenses. The net comprehensive income for the nine months ended September 30, 2019 was largely a result of realized gains on digital assets, partially offset by the year to date operating expenses.