Nearly 80 people remain on staff. The company is hiring for several open positions, one source close to the company said. (None were listed on its LinkedIn page as of Thursday evening, but the source said the company is relying on inbound inquiries, recruiters and networking for prospects).
This person and another insider described the cuts as “standard year-end” activity.
Galaxy Digital, the cryptocurrency merchant bank founded by Wall Street veteran Michael Novogratz, has laid off 13 people, roughly 15 percent of its workforce, people familiar with the situation said.
The layoffs occurred across the board in early January, and all of the New York-based firm’s business divisions – asset management, trading, principal investments, and advisory services – were left intact. In other words, no business line was singled out or discontinued.
A third source, a former employee, said Galaxy had hired people expecting that the digital asset markets would develop more quickly than they actually did, and realized it had overbuilt.
Novogratz mentioned the reductions at an all-hands meeting to kick off the year, and they were “reasonably well taken in stride,” one insider said.
The cuts occurred just before a recent run-up in the price of bitcoin, the bellwether of the digital asset sector, which has climbed from under $7,000 at the beginning of the year to over $10,000 this week.
A spokesperson for Galaxy declined to comment.
Founded in 2018, Galaxy has yet to consistently turn a profit. Its net loss for the third quarter of 2019 (the most recent period for which figures are available) narrowed to $68 million from $77 million a year earlier, according to a securities filing.
Operating expenses fell over this period, largely because Galaxy had paid more equity-based compensation in 2018. Trading volume declined from the second quarter, in line with the market, according to the company, whose shares are publicly traded in Canada.
For the first nine months of last year, Galaxy made a profit of $58 million, compared to a $176 million loss for the comparable period in 2018. Its digital asset portfolio nearly doubled, to $133.5 million, over that nine-month period, due primarily to price increases.
In addition to trading cryptocurrencies such as bitcoin and ether, Galaxy holds stakes in high-profile startups including payments unicorn Ripple, crypto lender BlockFi, blockchain sleuthing specialist Ciphertrace, futures market Bakkt and industry-friendly financial institution Silvergate Bank.
NYAG to Court: Don’t Let Bitfinex Keep Stonewalling Our Investigation
Bitfinex may be enjoying a break from having to produce documents to investigators, but it should be preparing for when the reprieve ends, the New York Attorney General’s office said.
In a newly disclosed letter, written by senior enforcement counsel John Castiglione and filed on Sept. 30, the NYAG’s office outlines how Bitfinex and Tether, as well as other affiliated entities, have not produced any documents pertaining to an alleged cover-up of an inter-company loan.
The NYAG’s office revealed it was looking into Bitfinex, its sister stablecoin issuer Tether, and a number of other entities and individuals affiliated with the companies in April, alleging that Bitfinex lost access to nearly $1 billion in customer and corporate funds.
Further, the NYAG’s office alleged, Bitfinex made up the shortfall by borrowing from Tether’s reserves, which were meant to back its USDT stablecoin. The state legal enforcer successfully argued before New York Supreme Court Judge Joel Cohen that the respondents should turn over a number of documents about these alleged transactions, as well as halt any further lending by Tether to Bitfinex.
While the judge did rule in the NYAG’s favor, Bitfinex immediately appealed and secured a temporary stay over the document production requirements last month, and has until November to “perfect” its appeal.
Castiglione wrote Tuesday that the companies did not follow the court order before the stay was granted, saying:
“Even though one month elapsed between the issuance of this Court’s August 19 Order and the stay, no documents were produced. That means that since the granting of the 354 Order in April, Respondents have failed to produce a single non-jurisdictional document.”
Dawdling on documents
The appeal will draw the case out for several more months, during which time no documents will be produced, Castiglione wrote Tuesday.
Because of this, he asked Judge Cohen to have the respondents compile all of the necessary responsive documents now, “so that full and immediate production can be made to the OAG once the appeal concludes.”
If the judge does not order the companies to produce these documents, then they will most likely continue delaying, Castiglione wrote, saying:
“Unless the Court directs Respondents to collect these materials now, what will happen is predictable: Respondents will, upon lifting of the stay, argue for more time to search and collect materials, file more motions challenging the scope of the 354 Order, and otherwise take whatever steps they believe will be tolerated by the Court to further delay the OAG’ s investigation.”
“By ordering Respondents to get materials in order now, the Court will ensure an orderly process and will facilitate the conclusion of the OAG’ s investigation”, he added.
Stuart Hoegner, General Counsel to Bitfinex and Tether, told CoinDesk that the companies “remain pleased” with the appellate division’s order last month granting the stay.
“We will reserve any further comment in this matter until we respond directly to the court”, he said.