Galaxy Digital Announces Fourth Quarter 2020 Financial Results

Galaxy Digital Announces Fourth Quarter 2020 Financial Results

• Net comprehensive income[1] increased over 1,100% since the Fourth Quarter 2019

• Assets Under Management ("AUM")[2] increased over 98% in the Fourth Quarter 2020

• Counterparty trading volumes increased over 80% in the Fourth Quarter 2020

• Galaxy Digital is actively preparing for a U.S. listing in the second half of 2021

• Industry Veteran Alex Ioffe joins as Chief Financial Officer, effective April 1, 2021

NEW YORK, NEW YORK, March 30, 2021- Galaxy Digital Holdings Ltd. (TSX: GLXY) ("Galaxy Digital" the "Company" or "GDH Ltd.") today released financial results for the year ended December 31, 2020 for both itself and Galaxy Digital Holdings LP (the "Partnership" or "GDH LP").

“I am proud to share the results of Galaxy Digital's transformational fourth quarter, as net comprehensive income increased over 1,100%, AUM increased over 98%, and counterparty trading volumes increased over 80%," said Michael Novogratz, Founder and CEO of Galaxy Digital. "That dramatic growth accelerated further into the first quarter, which we expect to be another record quarter."

"Moreover, and as a key component of our growth strategy, I am pleased to announce we are actively preparing for a U.S. listing in the second half of 2021. I am also excited to welcome industry veteran Alex Ioffe as our new Chief Financial Officer, and I want to thank Ash Prithipaul for his significant contributions and for leaving Galaxy well positioned for even brighter days ahead. We believe our industry is at an inflection point as we participate in a once in a lifetime secular shift into cryptocurrencies as an institutionalized asset class. Galaxy Digital is committed to leading our clients and the industry through this transformation."

Select Financial Highlights for the Fourth Quarter 2020, compared to Fourth Quarter 2019

• Net comprehensive income[1] increased 1,175% to $335.7 million, from a net comprehensive loss of $31.2 million in the prior year period.

  • The increase was primarily a result of realized and unrealized gains on digital assets and on investments, coupled with strong contributions from our trading business, partially offset by higher operating expenses.

  • Income from our trading business increased 842% to $238.7 million, from a loss of $32.2 million in the prior period.

• Fair Value of Net Asset Holdings[3] increased 272% to $813.5 million, from $218.7 million in the prior year period.

  • The increase was primarily a result of unrealized gains on digital assets and on investments.

  • The Partnership had a material holding in bitcoin of $433.0 million as of December 31, 2020, an increase of $351.8 million from December 31, 2019, excluding non-controlling interests.

  • Investments stood at $260.4 million as of December 31, 2020, an increase of $102.2 million from December 31, 2019. The change was primarily due to the increase in unrealized gains and $39.3 million of new capital deployed by the Principal Investments team during the year, which were partially offset by the sale of some investments.

Operating Highlights and Other Updates for the Fourth Quarter 2020, compared to Third Quarter 2020

• Galaxy Digital Trading (“GDT”) generated a record in: counterparty trading volumes, the size of its counterparty loan book, and in gross counterparty loan book originations in the fourth quarter 2020, compared to the third quarter 2020.

  • In the quarter ended December 31, 2020, GDT counterparty volumes were up 80%+ sequentially quarter over quarter and 230%+ year over year.

  • In the quarter ended December 31, 2020, GDT's counterparty loan book grew in excess of 300% to approximately $110 million, and the Company grew gross counterparty loan originations in excess of 90% to approximately $110 million.

• Galaxy Digital Asset Management ("GDAM") reported assets under management ("AUM") of $807.3 million as of December 31, 2020, an increase of over 98% from $407.4 million as of September 30, 2020. AUM consisted of $482.3 million in GDAM’s Galaxy Fund Management products, and $325.0 million in the Galaxy Interactive fund.

  • Recent product launches include the CI Galaxy Bitcoin Fund (Ticker: BTCG), a TSX-listed closed end mutual fund in partnership with CI Financial. Additionally, the Bloomberg Galaxy Bitcoin Index (Ticker: BTC) went live.

  • Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the “Bitcoin Funds”) track the Bloomberg CFIX pricing of bitcoin ("XBT"), and the XBT returned 170.8% in the fourth quarter of 2020, and 305.6% for the year ended December 31, 2020.

  • Galaxy Benchmark Crypto Index Fund LP (the "Index Fund") is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"). The BGCI returned 120.5% in the fourth quarter of 2020 and 276.7% for the year ended December 31, 2020.

• Galaxy Digital Investment Banking ("GDIB") continued to make progress for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.

  • GDIB recognized an advisory fee from serving as sell-side advisor to Blockfolio on its announced sale to FTX Trading Limited for $150.0 million, which closed in October 2020. Blockfolio is a leading mobile app for cryptocurrency portfolio tracking and management and has over six million users globally.

• Principal Investments: The Company completed seven new investments in companies and held approximately 70 investments across 50 portfolio companies as of December 31, 2020.

Operating Highlights and Other Updates through March 22, 2021

• The Company has appointed Alex Ioffe as its new Chief Financial Officer, effective April 1, 2021. Mr. Ioffe was most recently the CFO of Virtu Financial and prior to that spent over 15 years as CFO for the brokerage business at Interactive Brokers. Mr. Ioffe is taking over the role from Ashwin Prithipaul, who is stepping down to spend more time with his family and will be remaining on through the second quarter of 2021 to ensure a smooth transition.

• Galaxy Digital Trading (“GDT”) expects to generate records in: counterparty trading volumes, the size of its counterparty loan book, and in gross counterparty loan book originations in the first quarter 2021.

  • In the period between January 1, 2021 and March 22, 2021, GDT counterparty trading volumes continued significant growth, up 40%+ from the quarter ended December 31, 2020, and over 270% year over year.

  • GDT continued to experience strong growth in the Company's counterparty loan book for the period from January 1, 2021 to March 22, 2021, increasing in excess of 240% to approximately $380 million, and grew gross counterparty loan originations in excess of 400% since December 31, 2020 to approximately $560 million.

• Galaxy Digital Asset Management ("GDAM") expects to report preliminary assets under management ("AUM") of $1.24 billion as of March 22, 2021. AUM consisted of $911.0 million in GDAM’s Galaxy Fund Management products, and $325.0 million in the Galaxy Interactive fund.

  • Recent product launches include: the CI Galaxy Bitcoin ETF (Ticker: BTCX), and the Galaxy Ethereum Funds. The Galaxy Ethereum Funds track the newly launched Bloomberg Galaxy Ethereum Index (Ticker: XET), the third in the Bloomberg-Galaxy family of indices.

  • In March 2021, Morgan Stanley began offering its wealth management clients access to bitcoin funds, including the Galaxy Bitcoin Fund LP, and the Galaxy Institutional Bitcoin Fund LP.

  • Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the “Bitcoin Funds”) track the Bloomberg CFIX pricing of bitcoin ("XBT"), and the XBT has returned 92.0% on a year-to-date basis through March 22, 2021.

  • Galaxy Benchmark Crypto Index Fund LP (the "Index Fund") is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"). The BGCI has returned 105.6% on a year to date basis through March 22, 2021.

• Galaxy Digital Investment Banking ("GDIB") continued to make progress for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.

  • Key activities as of March 22, 2021 include consulting on a recent cryptocurrency company's fundraising round.

  • GDIB also acted as a Strategic Advisor in connection with a public offering in the FinTech space.

  • GDIB increased client coverage to 90%+ of its target universe.

• Galaxy Digital Mining ("GDM") established its own proprietary bitcoin mining operation, hosting its machines at a third-party data center in the United States, and has begun proprietary mining.

  • GDM closed its first two mining financing deals.

  • GDM has built a strong pipeline, speaking with over 70+ companies in the space.

• Principal Investments: The Company made 12 new investments and now holds approximately 80 investments across approximately 60 portfolio companies.

  • The Company recognized a liquidity event of over $125 million from one of its portfolio companies during the first quarter 2021.

  • There was no significant change in the Company's digital asset holdings (excluding non-controlling interests) since December 31, 2020, and the Company has, as a result, benefited from the increase in asset prices since the start of the year.

Select Financial Highlights for the Fiscal Year 2020 compared to Fiscal Year 2019

• Net comprehensive income increased 1,396% to $385.5 million, from $25.8 million in the prior year.

  • The increase was primarily a result of realized and unrealized gains on digital assets and on investments, coupled with strong contributions from our trading business, partially offset by higher operating expenses.

  • Income from our trading business increased 202% to $270.9 million, from $89.6 million in the prior year.

• Fair Value of Net Asset Holdings increased 272% to $813.5 million, from $218.7 million in the prior year.

  • The increase was primarily a result of realized and unrealized gains on digital assets and on investments.

  • The Partnership had a material holding in bitcoin of $433.0 million as of December 31, 2020, an increase of $351.8 million from December 31, 2019, excluding non-controlling interests.

  • Investments stood at $260.4 million as of December 31, 2020, an increase of $102.2 million from December 31, 2019. The change was primarily due to the increase in unrealized gains and $39.3 million of new capital deployed by the Principal Investments team during the year, which were partially offset by the sale of some investments.

Earnings Conference Call

An investor conference call will be held today, March 30, 2021 at 8:30 AM Eastern Time. A live webcast with the ability to ask questions will be available at: https://investor.galaxy.com/ or directly at: http://public.viavid.com/index.php?id=143959. The conference call can also be accessed by investors in the United States or Canada by dialing 1-877-407-0789, or 1-201-689-8562 (outside the U.S. and Canada). A replay of the webcast will be available and can be accessed in the same manner as the live webcast on the Company's Investor Relations website. Through April 27, 2021, the recording will also be available by dialing +1-844-512-2921, or 1-412-317-6671 (outside the U.S. and Canada) passcode: 13717682.

About Galaxy Digital Holdings Ltd. (TSX: GLXY) ("GDH Ltd.")and Galaxy Digital Holdings LP ("GDH LP")

GDH Ltd.'s only significant asset is a minority investment in GDH LP. GDH LP is a diversified, financial services and investment management company in the digital asset, cryptocurrency and blockchain technology sector. GDH LP’s multi-disciplinary team has extensive experience spanning investing, portfolio management, capital markets, operations, and blockchain technology. GDH LP operates in the following businesses: Trading, Asset Management, Principal Investments, Investment Banking and Mining. The CEO of GDH Ltd. and the general partner of GDH LP is Michael Novogratz. GDH LP is headquartered in New York City, with offices in Tokyo, Japan, London, England, Hong Kong, Amsterdam, Netherlands, Jersey City, U.S., San Francisco, U.S., Chicago, U.S., and the Cayman Islands (registered office).

Additional information about GDH LP’s businesses and products is available on www.galaxydigital.io.

For further information: Investors Relations Contacts, Elsa Ballard, [email protected], Steven Wald, [email protected], (212) 390-9216; Media Relations Contact, Eva Casanova, [email protected], (917) 847-4796

This press release should be read in conjunction with (i) GDH LP’s Management Discussion and Analysis and Consolidated Financial Statements for year ended December 31, 2020 and (ii) GDH Ltd.’s Management Discussion and Analysis and Consolidated Financial Statements for the year ended December 31, 2020 (together, the “Consolidated Financial Statements” and “MD&As”), which have been filed on SEDAR at www.sedar.com.

Disclaimers and Additional Information

The TSX has not approved or disapproved of the information contained herein. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy Digital.

The Company listed on the TSX via TSX Sandbox, an initiative intended to facilitate listing applications that may not satisfy the original listing requirements of TSX, but due to facts or situations unique to a particular issuer otherwise warrant a listing on TSX. The TSX has exercised its discretion to waive the requirements of subsection 309(c)(i) of its manual (C$10 million in treasury resulting from public raise) which the Company did not meet and has approved the listing of the Company pursuant to TSX Sandbox. Galaxy Digital’s approval pursuant to TSX Sandbox was conditioned upon public filing of an Annual Information Form and prominent quarterly disclosure of digital assets and investments, which the Company has completed and agreed to continue to provide. The Company will remain listed pursuant to TSX Sandbox until such time as it has completed a twelve-month period without significant compliance issues after graduation. In addition, Galaxy Digital is required to disclose the following two risk factors that were also included in the most recent Annual Information Form for the year-ended 2020: (1) The Company has limited operating history and its business lines are nascent and subject to material legal, regulatory, operational and other risks in every jurisdiction; and (2) the market price and trading volume of the Company’s ordinary shares has been volatile and will likely continue to be so in response to, among other factors, market fluctuations in digital assets generally or the digital assets that Galaxy Digital holds or trades.

The performance of the Funds will vary from the performance of their respective indices.

BLOOMBERG is a trademark or service mark of Bloomberg Finance L.P. GALAXY is a trademark of Galaxy Digital Capital Management LP (GDCM). Bloomberg Finance L.P. and its affiliates (collectively, Bloomberg) are not affiliated with GDCM, the Galaxy Funds and their respective affiliates (collectively, Galaxy). Bloomberg's association with Galaxy is to act as the administrator and calculation agent of the Indices (collectively, the "Index"), which is the property of Bloomberg. Neither Bloomberg nor Galaxy guarantee the timeliness, accurateness, or completeness of any data or information relating to the Index or results to be obtained. Neither Bloomberg nor Galaxy make any warranty, express or implied, as to the Index, any data or values relating thereto or any financial product or instrument linked to, using as a component thereof or based on the Index (Products) or results to be obtained therefrom, and expressly disclaims all warranties of merchantability and fitness for a particular purpose with respect thereto. To the maximum extent allowed by law, Bloomberg, its licensees, Galaxy, and their respective employees, contractors, agents, suppliers, and vendors shall have no liability or responsibility whatsoever for any injury or damages—whether direct, indirect, consequential, incidental, punitive, or otherwise—arising in connection with the Index, any data or values relating thereto or any Products—whether arising from their negligence or otherwise.

This press release contains certain pre-released first quarter 2021 financial information (the “pre-released financial information”). The pre-released financial information contained in this press release are preliminary and represent the most current information available to the Company's management, as the Company completes its financial procedures. The Company's actual consolidated financial statements for such period may result in material changes to the pre-released financial information summarized in this press release (including by any one financial metric, or all of the financial metrics, being below or above the figures indicated) as a result of the completion of normal quarter end accounting procedures and adjustments, and also what one might expect to be in the final consolidated financial statements based on the financial information summarized in this press release. Although the Company believes the expectations reflected in this press release are based upon reasonable assumptions, the Company can give no assurance that actual results will not differ materially from these expectations.

No offering is being made by this material. This communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

Forward-Looking Statements

Certain information in this press release, including, but not limited to, statements regarding the Company’s listing plans, the Company and Partnership’s anticipated first quarter 2021 results, digital asset opportunity set and momentum in the businesses, may constitute forward looking information (collectively, forward-looking statements), which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” (or the negatives) or other similar variations. Because of various risks and uncertainties, including those referenced below, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Forward looking statements are subject to the risk that the global economy, industry or the Company’s businesses and investments do not perform as anticipated, that revenue or expenses estimates may not be met or may be materially less or more than those anticipated, that trading and lending momentum does not continue or the demand for trading and lending solutions declines, that expected fundraising for asset management products is delayed or not achieved, that investment banking transactions may be modified or not completed at all, that the mining business is not able to gain traction with clients and partners and those other risks contained in the Annual Information Form (AIF) for the year ended December 31, 2020. Factors that could cause actual results of the Company and its businesses to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market or general economic conditions; the failure or delay in the adoption of digital assets and the blockchain ecosystem by institutions; a delay or failure in developing infrastructure for the trading, mining and investment banking businesses or achieving mandates and gaining traction and the failure to grow assets under management. In connection with the forward-looking statements contained in this press release, the Company has made assumptions that no significant events occur outside of the Company's and Partnership’s normal course of business. Forward-looking statements are not guarantees of future performance, accordingly, you should not put undue reliance on forward-looking statements. Information identifying assumptions, risks and uncertainties relating to the Company and the Partnership are contained in Galaxy Digital’s filings with the Canadian securities regulators available at www.sedar.com. The forward-looking statements in this press release are applicable only as of the date of this release or as of the date specified in the relevant forward-looking statement and Galaxy Digital undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

Galaxy Digital Holdings LP’s Financial Results

Income and expenses by each reportable segment of GDH LP for the three months ended December 31, 2020 are as follows:

Income and expenses by each reportable segment of GDH LP for the three months ended December 31, 2019 are as follows:

Assets and liabilities by reportable segment of GDH LP as of December 31, 2020 are as follows:

Assets and liabilities by reportable segment of GDH LP as of December 31, 2019 are as follows:

Select statement of financial position information

The fair value of each asset class by reporting segment of GDH LP as of December 31, 2020 is as follows:

The fair value of each asset class by reporting segment of GDH LP as of December 31, 2019 is as follows:

[1] Excluding non-controlling interests ("NCI"). [2] AUM is an internal estimate inclusive of a sub-advised fund, committed capital in a closed-end vehicle, and seed investments by affiliates. Changes in AUM are generally the result of performance, contributions, and withdrawals. [3] This supplementary financial measure is defined as Digital assets plus Investments, less Digital assets sold short, less Investments sold short, less Non-controlling interests.