Crypto investment firm Galaxy Digital today reported a Q2 loss of over half a billion dollars—but the New York firm asserts that the numbers were due to “unrealized losses” on digital assets. The company also said it maintains a strong liquidity position of $1.5 billion.
An unrealized loss refers to losing money via an asset that has decreased in price but has not yet been sold.
Galaxy Digital, which was founded by billionaire Mike Novogratz, only lost $182.9 million in the same period last year. This quarter’s $554.7 million loss was in part “due to decreased digital asset prices,” the company said.
Novogratz said he stood by his firm’s latest results.
“I am proud of Galaxy's outperformance during a challenging market and macroeconomic environment,” he said in a company release. “Prudent risk management, along with our commitment to exacting credit standards, allowed us to maintain over $1.5 billion in liquidity, including over $1.0 billion in cash.”
He added: “We remain in strong position to weather prolonged volatility, and to take advantage of strategic opportunities to grow Galaxy in a sustainable manner.”
Novogratz was an outspoken fan of the Terra blockchain. The billionaire Bitcoiner was such a fan of the project that he famously got a “Luna” tattoo, marking his skin with the name of the defunct network’s native token.
Although Terra made headlines when it spectacularly crashed in May, leading to billions of dollars in losses for investors, Galaxy leadership noted a more complex outcome for its Luna holdings in its first quarter management discussion and analysis document.
"For the three months ended March 31, 2022, the largest contributor to the Net realized gain on digital assets of $355.0 million was sales of Luna," the company noted, comparing it to the same period in 2021 when Bitcoin and ETH drove its gains to the tune of $730.7 million.
However, again for the first quarter of this year, Galaxy noted that "the largest contributor to the Net unrealized loss on digital assets of $500.3 million were unrealized losses on the reversal of the previously recognized unrealized gains from the sale of Luna and ether."
Novogratz has since admitted that being a crypto investor is not for everyone and that some of the huge returns experienced with some crypto investments are “not normal.”