Profile of Mike Novogratz, whose merchant bank Galaxy Digital has raised $242M on Toronto Venture Exchange in August and is a major investor in crypto startups
Mike Novogratz keeps crossing his fingers that this year's bitcoin crash, which has seen the cryptocurrency lose three-quarters …
Context & Ripple Effects
This Financial Times profile lands at the bottom of the 2018 cycle: Mike Novogratz had just taken his merchant bank public via a $242M Toronto Venture Exchange listing in August, months after Galaxy Digital led crypto lender BlockFi's $52.5M round, and weeks before the firm disclosed a $136M loss for the first nine months of 2018 on Ether, Bitcoin, and XRP positions. The piece captures Novogratz betting his own balance sheet that the crash is survivable.
The later coverage validates both halves of that bet's risk: by mid-2022 Galaxy was down 69% YTD with Novogratz famously tattooed ahead of Luna's collapse, yet he was still framing crypto's cycles in a New York Magazine Q&A — and by 2025 the firm was pitching the SEC on tokenizing its own stock, a regulated-instrument pivot that echoes this 2018 moment of seeking legitimacy through traditional market venues.
First-order effects
- Galaxy Digital's TSX Venture listing ties its valuation directly to bitcoin's drawdown — the same quarter it reported $136M in nine-month losses, so public-market investors are absorbing crypto volatility through an equity wrapper rather than tokens directly.
- Portfolio companies like BlockFi, whose $52.5M round Galaxy led, now depend on a backer whose own capital base is shrinking with the market.
Second-order effects
- Rival crypto funds and merchant banks face the same forced choice Galaxy made: list abroad (Toronto rather than a US exchange) to access public capital while US regulatory treatment of crypto equities stays unsettled.
- As balance-sheet investors retrench, startup valuations in the space reset downward, shifting deal power from founders to the few funds still holding dry powder.
Third-order effects
- If the pattern holds across cycles — 2018's crash, 2022's Luna collapse, the later $482M quarterly loss — crypto financial firms survive by converting trading-book exposure into fee-generating, regulator-negotiated businesses like the tokenized-equity platform Galaxy later pitched to the SEC.
- Public listings on venues like the TSX Venture normalize crypto exposure for mainstream portfolios, pulling the asset class toward the institutional structure — and the scrutiny — of traditional finance.
The trend: Crypto merchant banks keep getting repriced by each market cycle, pushing them from balance-sheet bets toward regulated, tokenized financial infrastructure to survive.