Galaxy Digital Starts Minimizing FTX Exposure As Q3 2022 Continues Losses

The blockchain firm is reportedly in the process of withdrawing US$47.5 million from FTX which “effectively paused” withdrawals

Galaxy Digital Holdings Ltd. (TSX: GLXY) released today its Q3 2022 financial results, which saw the company posting a net comprehensive loss of US$68.1 million. This is an improvement from Q2 2022’s net loss of US$554.7 million but still a decline from Q3 2021’s net income of US$517.9 million.

“The loss was primarily related to unrealized losses on investments in our principal Investments business, driven by reduced valuations on certain investments due to external market conditions, and increased operating expense for our mining business due to impairments in mining assets, driven by dislocations in the mining space,” the company said in its statement.

The company recorded net realized and unrealized losses on investments at US$8.8 million and US$39.3 million, respectively.

It also seems the blockchain firm is in the middle of recording more losses tied to its exposure to FTX, which is currently facing a crashing valuation for its FTT token amid so-called “liquidity crunches.” Galaxy Digital reportedly has around US$76.8 million in cash and digital assets invested in the embattled firm, around US$47.5 million of which is in the process of being withdrawn.

However, according to a leaked Telegram message by FTX CEO Sam Bankman-Fried to staff, FTX has “effectively paused” withdrawals.

READ: Crypto Drama: FTX And Its Growing Red Flags

To add to this, Binance recently announced with FTX that the latter sought help to address the “liquidity crunch,” hence the plan for the China-based crypto exchange to acquire FTX–adding a layer of complication to the withdrawal process.

Galaxy Digital’s exposure to FTX compares to the firm’s total assets under management, which stands at US$2.04 billion at the end of October–a 4% increase from its September balance of US$1.99 billion

Looking at the financials, the company ended the quarter with US$865.5 million in digital assets from a balance of US$875.1 million last quarter and US$2.42 billion at the start of the year. The firm also had a cash balance of US$1.04 billion at the end of the three-month period, putting the company’s current assets balance at US$2.31 billion. Meanwhile, current liabilities ended at US$1.05 billion.

Earlier this month, the firm was said to be considering laying off up to 20% of its workers in the face of a digital-assets market downturn, translating to 75 out of the reported 375 employees.

Galaxy Digital Holdings Ltd. last traded at $4.65 on the TSX, down 17% on the day.

Information for this briefing was found via Sedar and Galaxy Digital. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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