Galaxy Digital CEO raising $250 million for crypto credit fund
Not all heroes wear capes it seems.
It has recently emerged that the CEO and Chairman of Galaxy Digital, Michael Novogratz, is raising $250 million to act as a lifeline for crypto projects which are struggling to cope with the current bear market.
A former hedge fund manager and Goldman Sachs partner, Novogratz has rapidly become one of the main faces of the institutional/crypto turncoats, and whose consistent bullishness under times of duress has provided many an investor with much-needed reassurance.
Look no further than when Galaxy Digital accrued losses of $136 million in just the first three quarters of 2018, only for Novogratz to respond with very optimistic forecasts for 2019/20 in which he predicts big adoption taking place. For this reason, this latest pledge may not come as much of a surprise.
Opportunity, but for whom?
It is quite difficult to gauge exactly what type of project or company will meet Galaxy’s criteria for obtaining credit funds, however, there are certain indicators which can provide some insight into what type of actors could successfully receive loans in U.S. dollars.
Firstly, owing to their substantial losses experienced in 2018, one can be sure that Galaxy Digital will be doing an INCREDIBLY thorough audit of any project that approaches them for credit, and given how Novogratz attributed the sell off, in part, to the SEC getting tough on fraudulent ICOs, posturing from opportunistic projects will most likely not succeed – not this time.
Additionally, owing to the fact that these funds will be distributed as credit, there is a strong probability that ‘established’ players may be the prioritised demographic. This is naturally conjecture, but given how large players like ConsenSys have had to make significant cutbacks in the face of the market downturn, it would make sense that companies of this standing and influence receive extra financial support for them to continue building industry-changing infrastructure. Think of it like adding some extra blocks to a fragile Jenga tower riddled with holes.
Ultimately, Novogratz and Galaxy will most likely already have a plan of action in place and a list of projects in mind, however don’t let this deter you if you think your project has genuine real world value and utility. Quality goes a long way.
Once again there is no way to know the exact type of impact this crypto credit fund will have on the overall state of the market, but in terms of the operational impact that extra funds will have, it is quite clear.
Therefore, access to additional funds will greatly contribute to the hiring of more developers; all of whom will command hefty salaries owing to their invaluable contributions to the development of a project’s blockchain infrastructure.
There is then marketing costs to consider.
Crypto marketing has been a remarkably costly affair, especially social media marketing (SMM) which has been one of the main approaches employed by many CMOs to promote their brands in front of large crypto communities on social media.
However, any loan demands for marketing purposes may be looked down upon as it has arguably been the disproportionate spending on marketing which has not only allowed for fraudulent ICO’s to reel in investors, but also why many projects are still lagging behind in their tech development.
Last but least, and something which many people fail to acknowledge are the legal costs involved.
Because regulatory concerns are causing a lot of anxiety for projects who have long term commercial ambitions, it has now become common practice for ICOs and established crypto companies to hire law firms and experts to provide consultation on how to best navigate through complex regulatory demands. This is by no means an easy feat, and because cryptocurrency is such a new and ever changing phenomenon, some law firms can charge up to $400,000 for their services.
In the event that funds go towards operational demands like these, a project’s output will most likely increase and at a quicker pace, meaning that crypto use and commercialisation is just one step close to becoming a reality.