Hedge fund legend and noted cryptocurrency bull Mike Novogratz has announced plans to create the “Goldman Sachs of Cryptocurrencies”, a “full service, digital assets merchant bank” for the crypto space.
Novogratz hopes his venture, Galaxy Digital LP, will be a “best-in-class, full service, institutional-quality merchant banking business in the cryptocurrency and blockchain space”. To fund the project he aims to raise $200 million and list it on the Canadian TSX Venture Exchange, which specialises in the listing of small cap companies.
The bank’s business model will include trading, managing client accounts, advising clients and investment, including in ICOs and pre-ICOs. It is believed that Novogratz will put his personal cryptocurrency holdings, estimated at around $400 million, into the new bank. American residents will be excluded from all of the bank’s services due to regulatory restrictions in the US.
Crypto Hedge Fund Shelved
Previously Novogratz had announced plans for a crypto hedge fund but changed course last month after Bitcoin suffered a sharp price correction, saying that, “we didn’t like market conditions and we wanted to re-evaluate what we’re doing.” It seems that he was also uncomfortable over the conflict of interest inherent in buying cryptocurrencies for clients while selling on his own account. Putting his own funds into the bank is a way around this conflict.
Creating the Bank
A complicated set of transactions need to be performed to create the company, and all changes will be subject to acceptance by the stock exchange, due diligence and shareholder approval. The starting point will be purchasing First Coin Capital Corp, which will then merge through a reverse takeover with shell company Bradmer Pharmaceuticals Inc. The new company will then be known as Galaxy Digital Holdings, and be listed on the TSX exchange.
Mike Novogratz was a partner at Goldman Sachs before heading up the Fortress Investment Group hedge fund. He has previously predicted that Bitcoin prices will top $40,000 this year.
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