Galaxy Digital Holdings, (TSX: GLXY), a digital assets focused financial services firm led by Michael Novogratz, is navigating an increasingly complex landscape of legal resolutions along with steady financial performance.
On March 27, the company agreed to a $200 million settlement with the New York Attorney General (NYAG) over its alleged role in promoting the now-collapsed Terra (LUNA) ecosystem.
This news dovetails with Galaxy’s announcement of its fourth quarter and full-year 2024 financial results, revealing a year of significant earnings but considerable challenges as well.
The Terra settlement stems from Galaxy’s actions between late 2020 and 2022, when it acquired 18.5 million LUNA tokens at a 30% discount from Terraform Labs, then promoted the token without proper disclosures.
According to NYAG filings, this fueled a price surge from $0.31 in October 2020 to $119.18 by April 2022, netting Galaxy hundreds of millions in profits.
When Terra’s stablecoin, UST, and LUNA imploded in May 2022—wiping out roughly $60 billion in value—the fallout drew regulatory scrutiny.
The NYAG alleged Galaxy misled investors with false statements about Terra’s operations and its ties to the Chai payment app, violating disclosure rules.
The $200 million penalty, payable over three years—starting with $40 million within 15 days, another $40 million in a year, and $60 million annually thereafter—resolves these claims.
Novogratz called it a “difficult but necessary” step, allowing Galaxy to refocus on digital assets and AI innovation.
Meanwhile, Galaxy’s 2024 financials, released recently, showcase a year of operational strength despite the recent settlement announcement.
The company reported a net income of $174 million for Q4 and $365 million for the full year ($1.02 per diluted share), though these figures include a $166 million legal provision for the Terra case.
Excluding this, net income jumps to $341 million for Q4 and $532 million annually ($1.49 per diluted share).
Counterparty trading and advisory revenue hit $68 million in Q4 (up 26% from Q3) and $215 million for the year, surpassing the prior two years combined, driven by robust derivatives trading and lending demand.
Galaxy Asset Management (GAM) posted $49 million in fees, closing 2024 with $5.7 billion in assets under management, buoyed by FTX estate monetization and organic inflows.
Mining revenue reached $22.1 million in Q4, with a 46% profit margin, though Galaxy’s shift toward AI hosting at its Helios campus hints at evolving priorities.
Looking ahead, Galaxy anticipates a Q1 2025 pre-tax loss of $275 million to $325 million, reflecting crypto market volatility and strategic investments.
A 15-year, $4.5 billion lease with CoreWeave to power AI infrastructure at Helios underscores this pivot.
Despite the Terra hit, Galaxy’s $2.3 billion equity capital and $7.2 billion in total assets signal resilience in a challenging market.
Novogratz emphasized a “transition to robust operating businesses,” while new CFO Tony Puquette eyes U.S. market opportunities, including a Nasdaq listing push.