Galaxy Digital Acquires DrawBridge Lending and Blue Fire Capital

Galaxy Digital Acquires DrawBridge Lending and Blue Fire Capital

By Capital Markets CIO Outlook | Tuesday, November 17, 2020

DrawBridge and Blue Fire are both pioneers in applying their teams' institutional expertise in traditional lending, structured products, futures, and market-making to the rapidly growing cryptocurrency derivatives and lending space.

FREMONT, CA: Galaxy Digital Holdings Ltd. announced that it has acquired two leading cryptocurrency trading firms: DrawBridge Lending, an innovator in digital asset lending, borrowing, and structured products, and Blue Fire Capital, a proprietary trading firm specializing in market-making and two-sided liquidity for digital assets.

"Galaxy Digital's mission is to bring cryptocurrency to traditional finance and vice versa. DrawBridge and Blue Fire's market-leading capabilities will enable us to further amplify our strong position as a go-to trading desk in digital assets and more rapidly grow our innovative portfolio of trading products and services," said Christopher Ferraro, President of Galaxy Digital. "Furthermore, these acquisitions bring in two exceptional and experienced teams who will play key roles in managing and expanding our business in the years to come."

Michael Novogratz, Founder, and CEO of Galaxy Digital, said, "Institutional investors and corporates are becoming more knowledgeable and comfortable with digital assets and they are increasingly grasping the purpose and importance of cryptocurrency in their investment strategies. We are looking forward to seamlessly integrating DrawBridge and Blue Fire into Galaxy Digital Trading and strategically leveraging our world-class team, technology and solutions to help further meet what we believe will be an even bigger wave of institutional demand."

Galaxy Digital Trading (GDT) operates a 24-hour global trading model and provides institutional clients and counterparties with a broad range of trading strategies. It currently trades over $4 billion of OTC volume annually with nearly 200 active counterparties globally. 2020 has seen a broad institutional recognition of cryptocurrency use cases by investors, corporates, regulators, and governments. As a result, GDT has seen a significant increase in institutional demand for cryptocurrency-related financial products and services.

"Over the past two and a half years the Galaxy Digital Trading team has been executing on a product and technology roadmap that has allowed for first-class execution, deep liquidity and an expanding set of services across spot and derivatives, including principal, agency and electronic trading," said Peter Wisniewski, Co-Head of Galaxy Digital Trading. "These acquisitions are a continuation of this progress to date, and an important milestone as we continue to broaden our talent base and build out our differentiated capabilities, spanning fiat and digital asset lending, structured products, and prime brokerage services."

Key Transaction Benefits:

• The combination further expands Galaxy Digital Trading's revenue-generating activities by immediately diversifying GDT beyond its current annual OTC trading volume of $4 billion and into expanded derivatives and futures trading; on-exchange market making; and lending, borrowing, and structured products.

• Scales DrawBridge's first-mover lending and structured product offerings in crypto via Galaxy Digital's institutional market relationships and robust, publicly-audited balance sheet while adding DrawBridge's $150 million+ of third-party assets to Galaxy Digital.

• Builds on DrawBridge's strategic partnership with GDT, which was formed in 2019. The companies have subsequently evaluated dozens of bespoke loans together and executed on a growing live loan book, which will be expanded due to this transaction.

• Amplifies Blue Fire's best-in-class trading strategies and execution with Galaxy Digital's comprehensive sources of liquidity and further enhances the combined firm's excellent relationships with key global crypto exchanges via Blue Fire's $36 billion+ of annual notional derivatives trading volume. Drives the utilization and optimization of Galaxy Digital's balance sheet to unlock strong risk-adjusted return opportunities and provide customers and counterparties with best-in-class market access and trading capital efficiency.

• Establishes a robust regional hub in Chicago for Galaxy Digital to expand agency, prime brokerage, and electronic trading services and increase connectivity with traditional derivatives firms as they look to move into crypto markets with blue-chip partners.

• Further strengthens Galaxy Digital Trading's leadership team with veteran trading and lending market participants who possess proven track-records across traditional asset classes and the crypto markets.

• DrawBridge's CEO and Co-Founder, Jason Urban, will join Galaxy Digital as Co-Head of Galaxy Digital Trading and will work alongside fellow Co-Head, Peter Wisniewski. Andrew Karos will join Galaxy Digital and remain CEO of Blue Fire, which will continue to operate as a wholly-owned subsidiary.

• Provides near-term capital deployment opportunities for Galaxy Digital's recent $50 million financings from institutional investors.

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