Novogratz’s Galaxy Digital raises $52.5m investment in BlockFi
Galaxy Digital Ventures, the investment bank that focuses on crypto and digital projects, has fronted a $52.5m fundraising for crypto-backed lender BlockFi, it was announced on Wednesday.
BlockFi specialises in lending to individuals and companies by using their crypto assets as collateral and offering interest on loans of around 12% – a broadly lower rate than most unsecured loans, but a little higher than most secured loans using traditional collateral such as real estate.
The lender will reportedly use the funds raised by Galaxy Digital to expand its business to incorporate more digital currencies – it currently just takes bitcoin and ether as collateral – and to expand outside of the US.
Galaxy Digital Ventures was founded in February by Mike Novogratz, a former Goldman Sachs banker who then joined Fortress Investment Group in 2002 as chief investment officer of the Fortress Macro Fund. With a crypto net worth of around $1.5bn, Forbes lists Novogratz among the top 10 richest in the crypto universe.
“We’re excited to partner with BlockFi and jointly lead the way for financial institutions to participate in crypto investing strategies,” Novogratz said in a post on BlockFi’s blog.
“A robust lending market is the keystone for financial systems and BlockFi’s institutional approach and deep lending expertise were key drivers in our decision to partner with them.”
Since its launch in January, BlockFi said it had shown there is significant demand for crypto-to-dollar lending, adding that its customers ranged from world travellers to first-time home buyers and industrial-scale crypto miners.
“Galaxy’s investment and decision to make us their exclusive consumer lending partner is a strategic step towards BlockFi delivering credit across the crypto ecosystem,” said Zac Prince, BlockFi’s chief executive and co-founder.
“The support we’ve seen from existing clients and investors highlight the strong demand for leveraging bitcoin or ether for low-cost US dollar loans. We look forward to expanding our services to support more cryptocurrencies and more geographic markets in the near future.”
A condition of the investment required Chris Ferraro, head of principal investments at Galaxy Digital, to join the board of directors at BlockFi.
Ferraro said: “We believe BlockFi’s risk management lens, regulatory approach, and marketing capabilities position the firm to be the market leader.”