Today Galaxy Digital announced an agreement to buy BitGo, one of the largest digital asset custody firms with $40 billion in assets under custody.
“The acquisition of BitGo establishes Galaxy Digital as a one-stop-shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology,” said Mike Novogratz, CEO and Founder of Galaxy Digital.
He continued, “The power of the technology, solutions, and people we will have as a result of this acquisition will unlock unique value for our clients and drive long-term growth for our combined business.”
BitGo processes 30 billion monthly transactions and serves over 150 cryptocurrency exchanges and 400 institutional clients, including Ripple, SBI Holdings, Securrency and NEXO. Founded in 2013, according to Crunchbase, it has raised $69 million in funding, but we believe the figure may be higher.
The custody company owns regulated trust companies in South Dakota, New York, Switzerland and Germany. Like many custody firms, its offerings are broader, including prime lending, trading and portfolio management.
For Galaxy Digital, the key additions from the acquisition are custody, the client base and geographic reach. It’s not the first time Galaxy has shown an interest in custody. For example, it’s an investor in the Nomura custody joint venture Komainu.
Galaxy is a multifaceted digital asset firm, perhaps best known for its asset management side. For example, when Morgan Stanley said it would offer exposure to Bitcoin to its clients, two of the avenues were Galaxy Digital funds. It’s also involved in the Bloomberg Galaxy Crypto Index.
Apart from asset management, Galaxy invests directly and is involved in trading and investment banking. Its stock is listed on the Toronto Stock Exchange and at close yesterday, it had a market capitalization of CAD 3.2 billion ($2.6 bn). For the acquisition, $265 million will be paid in cash (mostly deferred), with the balance as 33.8 million new Galaxy Digital shares.
Galaxy Digital also announced a reorganization involving a U.S. capital markets listing to increase its profile and help with future capital raises. Although currently listed in Toronto, its two main companies are registered in the Cayman Islands. It plans to incorporate a new company in Delaware, which will succeed the main listed company to get the U.S. listing.
