Galaxy Digital Wins GK8 Auction At A 60% Discount From Celsius Bankruptcy

Galaxy Digital Holdings Ltd. (TSX: GLXY) announced Friday that it has won an auction to purchase self-custody platform GK8 from bankrupt crypto lender Celsius Network.

“The acquisition of GK8 is a crucial cornerstone in our effort to create a truly full-service financial platform for digital assets, ensuring our clients will have the option to store their digital assets at or separate from Galaxy without compromising versatility and functionality,” said CEO Mike Novogratz. “Adding GK8 to our prime offering at this pivotal moment for our industry also highlights our continued willingness to take advantage of strategic opportunities to grow Galaxy in a sustainable manner.”

Celsius paid $115 million for the Israel-based cybersecurity firm in November 2021 but since then, the firm has figured itself into a Chapter 11 bankruptcy application with its deficit standing at $1.19 billion according to its documents. GK8’s acquisition by Galaxy Digital is said to be in connection with bankruptcy proceedings and is subject to court approvals and other closing conditions.

READ: Lenders’ List: Celsius Network Forced To Disclose Names Of Creditors

According to the Twitter account of the bankrupt crypto firm’s Official Committee of Unsecured Creditors, the “headline purchase price” for GK8 is around $44 million in “cash payment,” roughly a 62% discount from when Celsius purchased it in November 2021.

Galaxy Digital also said that it will add a team of approximately 40 professionals from GK8, including cryptographers and blockchain engineers, as part of the transaction, as well as an instant additional office in Tel Aviv.

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.

BMO Capital Markets’ reiterated their outperform rating for Galaxy Digital but cut their 12-month price target to $14 from $16 after the crypto company has called off the BitGo acquisition as a result of the firm’s inability to provide audited financial statements by the deadline.

But recently, the agency slashed again the 12-month price target down to $8 from $14 as it fears the firm will still be figured within the FTX implosion.  In its Q3 2022 report, Galaxy Digital reportedly had around $76.8 million in cash and digital assets invested in the embattled crypto exchange, around $47.5 million of which is in the process of being withdrawn.

Galaxy Digital Holdings Ltd. last traded at $4.25 on the TSX.

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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