What’s Next For Galaxy Digital CEO Mike Novogratz?

we forget? But while some industry leaders say they're upset by the allegedly illegal actions of some of their peers, they still have hope that the digital asset industry will thrive and the crypto market will recover. Mike Novergrats is a prime example. He's the CEO of Galaxy Digital, one of the top investment firms in crypto. The fifty eight year old is known for his ubiquitous presence in the crypto sphere and his assertive demeanor, which aligns well with

many in the crypto crowd. Novograts made it through the chaos of but that does not mean he and his firm were left unscathed. My colleagues Shannali Basik recently sat down with him and she joins us now to discuss what's next for him. Shinali, welcome to the show. Hi. So maybe just to lay out for listeners who might not know who my Canvograts is. Who is he, what's his background and how has he become this influential figure in the crypto space. So he's a very colorful person

on Wall Street, on crypto, in the philanthropy world. I've covered him myself since he spent time at Goldman Sachs. He was an early member of Fortress, which is a huge private asset firm, and through his time at Fortress he got into bitcoin along with his friend Pete Brigger, who is another Fortress founder. And again they got in in the early when it comes to bitcoins and made

a lot of wealth early on. Even after some spectacular hiccups on Wall Street, no Regrats remained a billionaire after having to shut his fund and Fortress that he had really headed up and lost a lot of money. Yet so this is his third big act. It is a time for redemption. But again, like I said, you know, it's funny when you ask him about kind of his ups and downs on Wall Street, spectacular ups and downs. He says, you know, at the end of the day,

he's made more money than lost. He's still a billionaire, and the same is true for the last couple of years in Crypto, and Crypto is known for giving people maybe second, third, fourth, whatever tries and comebacks. And we'll get to that. But can you tell us a bit more about his background? Who is he? Because he's known for being a wrestler who went to Princeton. I think he was actually roommates with a bunch of other people who are well known on Wall Street or in the

crypto space. So tell us a bit more about the man himself. He's known for his wrestling background and it's something that still permeates through a lot of what he does. He makes wrestling anecdotes a lot of time. He grew up in a big family, a military family, and his dad also wrestled. Mike himself was a Princeton wrestler. From what I understand, he was a close to winning a state champion as a ship as well so serious wrestler.

He also, you know, his whole family is kind of famous. Actually, his sister Jacqueline Novergrads is a famous venture capitalist known for impact investing. One of his brother's works at a one of the biggest hedge funds in the world. So the family that kind of grew up with humble roots ended up becoming this pretty famous family and investing, and like I was saying, in philanthropy and even in political circles.

He was kind of in a group with Stacy Abrams when it came to knocking door to door in Georgia during some of the most difficult political fights. He works closely with the Robin Hood Foundation also, which works to get people out of poverty. So he's very well known, like I said on Wall Street, but also you know, just not even just himself, coming from this amazingly colorful family.

And by the way, it was so funny because in December, when I was in his office, one of the things he had on his desk was a New York Post story about his entire family, with a post it note on the New York Post story saying from his former

pr chief saying, thanks for betting on me. So he's kind of had this insane influence on kind of just a lot of people who have worked for him in his life, and even with all the ups and downs of the past maybe five six, seven years of his life, he's also well known for wild parties or maybe a sort of like a party boy demeanor. So what's interesting is early, I want to say, seen so around seen. Remember he left Wall Street after his hedge fun at

Fortress kind of blew up. They had to shut it down return money, and he spent a lot of years investing just through his family office. It was this kind of trendy little outfit in like the Soho area of Manhattan, and he was investing bit coin, making a ton the money off a bitcoin at that time. This is pre two thousand seventeen, pre the Mount Cox blow up, and he realized he was making so much money for it

that he should start an investment firm. But he was having though was so much of the New York crypto community was coalescing inside of Mike Novegrass's family office. Every single Wednesday night they would have a party. I used to go almost everywhere where the fun. They were fun. It was funny about it, as Mike was. Sometimes they are sometimes not. And it reminds me a lot of last year following him around as well, because there were a lot of parties, but it was a stressful year.

So Mike was actually outside of those parties on the phone most of the time. When I was following him around last year. He's a He's a blast to be around, don't get me wrong. In fact, it was lifestyle choices that it led to his departure Goldman many an years ago is something that has been why they reported on. But get a big bar in his office, a little like, you know, one of those kind of bar cards. And I was asking about him. I'm not fancy enough to

know all the fancy liquers. I haven't written down. I'm wire, but he had a ton of fancy lackers. I asked him. I was like, you know, what is this bar for in your office? And he goes, you know, I don't really drink in the office. My traders do, though they raid my bar routine late. So that's really funny. Let's go back to the end of because that's when you were meeting with him. So what was going on in crypto?

What was the mood like when you were sitting down with him at his office, Like, what were the things that were top of mind for him? What did he want to talk about well, one of the first things I said as I sat down to him was, this is probably one of the hardest stories and went to write with you because we haven't had a market this toppy in a long time. I think that there's a lot of soul searching about his place, about Galaxy's place in this industry as so much of a shakeout is happening.

He sat back with his arms crossed. He's interesting and how he answers questions when he's not on TV because he waits a second and he thinks, he scratches his head and then he tells you what he thinks, and he's pretty again for journalists, a bit of a journ his dream because he tells you where he thinks he could have done something differently, and I think something that was important and interesting. We're talking about Luna, we're talking about Do Kwan. They weren't invested in all parts of

the empire. But I asked him as like, would you do anything different when it came to your exposure to Lunin Do Kwan? And he goes, I only met do twice, and he goes, I've got to say, now, I would want to meet people much more than that. I wouldn't want to have to maybe work out of my office. I would have done lunches, dinners, coffee. He's like, He's like, I already do that a lot. But he goes, knowing somebody more is a big lesson coming out of twenty two.

So it was a very big lessons learned kind of moment at the end of last year. Right, And in your story you say that he actually had somebody warn him about SPF and f t X. Yeah, I would die to know who, because interestingly, do you guys remember so there was a Friday that that bankruptcy filing was filed, the ft X on the fts bankruptcy, So remember, so Mike told me that they actually passed on the ability to invest in f t X on the unch around. Why. I asked why. It was a due diligence. He goes,

it's actually just a matter of valuation. We thought it was too expensive. They passed on the bench around, but it was one of many counterparties for them in the scope of digital, a Galaxy Digital. It's not a ton of exposure, but they did lose seventy seven million dollars. So his friend called him on Monday morning. This is the weekend, Like the Monday after that weekend, if you remember, uh cz over Finance was tweeting about selling his ft T tokens and Sam BigMan Freed was tweeting about their

own kind of financial health before everything crashed. So the Monday morning, Mike Negret's got a call gets a called from one of his billionaire friends who got a call from Sam. Sam at that point was looking for money and it was becoming clear that there was a large hole in f tx's balance sheet. That's when Mike started selling and reducing his exposure dramatically. Remember the one thing and again, like I said, this is really a make

or break moment for Mike. But the one thing he has in the benefit of hindsight that a lot of people don't have in crypto, especially if you're say thirty years old, like Sam Bigmannfried, the what it's like to have lost money in the past is an important lesson in risk management. There's a lot of people who trust

Mike because of how much money he's lost. So he started selling, selling, selling, They got it out until the exposure was just seventy seven million dollars and yeah, that that was that, And you know, I think that's an important kind of aspect of markets, this intimacy that people have and what's going on and how they find information.

I think, whether you're Mike or anybody, I think access to information in the crypto community, you know, it doesn't work the same way as it does in other financial markets. Sometimes I can't believe we've gone this far without mentioning the headline of your story, which is maybe one of the most provocative headlines I've ever seen, at least for Bloomberg. So it's Mike Nograds wants to punch disgrace cryptotitans in the face. Tell us who who he's angry with? Yeah,

you know, it's funny. An earlier version of this story, my first line was Mike nova Grass is frustrated because I asked him. I was trying to get a sense of his mindset, and frustrated is the best possible the way to put it. And you know, the two people who wanted to punch in the face were Barry Silbert and who was the Digital Currency Group head, who's a unit of Genesis Capital is now going under a bankruptcy process, and Sam BigMan freed. You know, you think about last year.

The whole thing started with Luna Three Arrows, but things exacerbated so dramatically with Three Arrows, leading to more issues over at Genesis, and then concerns about DCG and Barry Silver's handling of the whole situation, and Sam BigMan Freed of course, and and ft X is exposure and how that got wilder after the Luna collapse as well. And so the anger was very very very much directed less at Dough and more at Barry and Sam BigMan Freed

want to punch them in the face. This is where I say, you know, as a reporter, you're sitting here, we asked the questions, right, so it's kind of like I can ever do what Mike's personality is like justice, right, But you know, we started this conversation talking about how he's a wrestler, and the last line of the story kind of talks about how, you know, he's gearing up for his next big fight. He's going to fight the institutions and the regulators and just really win back trust

in this industry. Listen the rest of this this malarkey that we've had with between Three Arrows and and you know, Block five and Celsius and all these companies that were either poorly run or fraudulently run. Certainly is hurting the overall confidence in crypto. But this too shall pass. They will be brushed off into the dustbin of history, and the industry itself is going to emerge, having learned lessons, stronger, and you're going to see the price take back off,

which is why his place in this industry is so important. Yes, he's lots of money, but I talked to some of his billionaire friends as well, who are maybe exposed to crypto or maybe thinking about being exposed to crypto. One of the most important ones with Stan druck and Miller, legendary investor who worked for George Soros, now invest on his own at Duquesne. And I asked Danna, was like, would you give Mike money after all this? And he said, yeah,

he consider it. I mean, that's the thing that's interesting about all this, Mike, depending on who you are, depending on all the losses at Galaxy, even the stop. Remember Mike's own wealth. He lost more than three billion dollars on paper and a lot of that was Galaxy stock decline. So now it's a question of how is he going to raise money again and really get back to being on I mean he is, I mean they're will in

this industry. Let's be very clear about this. How is he gonna win back trust not just for Galaxy but for the industry after what happened last year? And I think that that's the pivotal question as Galaxy reorganizes. By the way, remember they laid off almost fifteen percent of their staff last year. But in a television interview, he told me that he actually thinks he'd count is going to get back to above where they cut because now they're buying the assets out of bankruptcy. So he's trying

to play offense. And I think that this will be a really interesting year coming up more with Bloomberg reporters Shinali Bastic on how one of the industry's top CEO is still pretty bullish on crypto. We'll be right back at the same time. You have this paragraph in the story. It says time is short, Galaxy no regards tells you can withstand eighteen more months of this pain four years. He's doubtful that his employees would be able to roll

with it for that long. For somebody so like I said, I've covered him since there's another little story i'll give you about after this, but you know, well, well let me answer the question first, because I think that is a critical part of the story because at the beginning I said this was a matter of Mike's reputation, and to the extent Crypto is kind of you know, Mike never got like a cat, like the guy's got nine lives and he makes it through, right, but you know,

and Wall Street works that way, you know, but eighteen months feels like there's a clock that's taking a little bit. He doesn't say he's gonna throw in the towel, he doesn't go that far, but he does say it'll be hard to keep him employee morale high, Like it's harder. It gets really harder after eighteen months to go through a market slump. Now back to when he first planned to start investing other people's money into Crypto after making

a lot of money on his own. He had a plan to start a hedge fund, and we wrote about it here atom I called Eric Shaska wrote about it very soon within like immediately, he decided he's not doing that anymore because the market conditions were bad. The market was crashing. So Mike again, even a bitcoin has been through historic ups and downs. The last crasheen Mount cox Era lost a lot of money, hundreds of millions of dollars, I'm told, and then he turns around and said goes bigger.

He goes, I am not gonna do hedge fund. I'm gonna build a merchant peg. I'm gonna build something that's gonn become the Golden Sacks of crypto. Can you imagine losing hundreds of millions of dollars, having a plan to do something, scraping plan, and then having a bigger plan the next day, which, by the way, he's then taking public on the Canadian Stock Exchange. He's trying to take a public in the United States. There's still a lot of concerns that the SEC has about crypto in general.

But if he gets listed in the US this year, what if? What a coup after all that? If you think about it, and especially when you think back to that initial story where the ambitions were just to have a crypto hedge fund. No, he wants to build a crypto empire. And as he restructures. One thing that's interesting that's happening is they're kind of merging different units, venture and asset management units, and it's very possible that they go back to market and raise money from third party

investors again. And that kind of dream about being like he's used a few different anecdotes Goldman of Crypto or Berkshire Hath the way of crypto to kind of invest in all of those fledgling companies. I think it's the venture part of it is harder to get a handle of because it's not like buying a token that goes up and down and you see how it does in a year. A venture investment often takes multiple years before

you see how it actually does in the end. So to end on a more positive note, so it's crypto, as we mentioned, is known for its second and third and fourth comebacks, comeback stories. We even have some recently, and then we've had some headlines of um, maybe we can call them disgraced crypto people who are trying to make a comeback. Still, So can you just talk about that aspect and what it is about crypto itself where there's this sort of never ending prospect of hope. Listen,

this is what makes it so fun to cover. I think it's the multifaceted angles. If you think about all the reasons um Crypto failed last year, a lot of it was risk management, a lot of it was Think about all of the way these companies were structured with the inter company loan, in the double triple quadruple bailouts, throwing a lot of bad money after good Think about what Mike did in that time. He sold, he largely sold, and again he's by now. But it's also become a

better year already for something like bitcoin. When I talked to his other investors as well, the reality for them, which is fascinating is that they, like a lot of people out there, believe Bitcoin itself hadn't failed in the middle of all of that, In the middle of what people were worried about being a systemic crash never happened. Even the genesis matter now so far is fairly contained.

Could get worse, could always get worse. But at the end of the day, you know, there are a number of very influential people in finance, let alone crypto, who have become more sold on the story after last year, more compelled to buy assets now that they're cheaper, right, more than a fourth cheaper than they were at their peak. So it all this is such a Pavoli year because do people by the story of Bitcoin Crypto. You were saying college college friends. Joe Lubin is friends with Mike.

You went to Princeton with Mike, um Dan Moore head over at Pantara, friend of Mike. So you let's see how these folks navigate through. They have made it largely away from a lot of those big disgraces as you've been talking about. But can they win back the hearts and minds of the people that are putting money behind this industry. We'll see. Thank you, guys, Basonale. That was Bloomberg reporter Shonali bask You can find more of her work on the Bloomberg terminal and on Bloomberg dot com.

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