Mike Novag Grant is considered to be one of the most well-respected voices in the crypto space. He makes frequent appearances on Bloomberg and CNBC where he gives bullish commentary about Bitcoin and other cryptocurrencies. He founded a company called Galaxy Digital, which serves as an investment Bank in institutional brokerage focused exclusively on cryptocurrencies. Galaxy Digital is headquartered in New York but ipoed on the Toronto Stock Exchange due to more liberal listing requirements in Canada.

It currently has a market cap of $2.7 billion Canadian dollars. Before getting into crypto, Novag Grat was a manager of a multi-billion dollar hedge fund and a partner at Goldman Sachs. Because of this, he is viewed by many Crypto Bulls as lending credibility to the industry. If people like Novag Grats are getting into Crypto, it's only a matter of time before the other Wall Street Big Wigs follow suit.

Or so the thinking goes. But just because someone has a few prestigious brands on their resume doesn't necessarily make them a Savvy investor or businessman. Novag Gratz was indeed promoted to a partner at Goldman Sachs in 1998, but just 2 years later, he was forced to resign in disgrace due to his excessive use of recreational substances. He was indeed the manager of a multi-billion dollar hedge fund within the Fortress Investment Group.

But in 2015, he was again forced to resign in disgrace after losing hundreds of millions of dollars for his investors. His more recent fora into crypto hasn't gone much better. He was a big investor in the Tera Luna Ponzi scheme, even going so far as to get a Luna tattoo on on his shoulder just months before the collapse Galaxy had over $70 million of exposure to another Ponzi scheme FTX when it to imploded. Despite all of his past failings, Novag Grat still makes frequent appearances on the financial media where he is portrayed as a great crypto expert.

In this video, we'll take a look at Mike Novag Gr's. entire career to see exactly how he got to where he is today and what this means for the crypto industry. Novag Grat started his career by getting a job as a salesperson at Goldman Sachs. In the late 1980s, he rose the ranks and within a few years was in charge of a trading desk focused on Asian currencies.

At the time, the economies of many Southeast Asian nations were booming. Foreign investors poured billions of dollars into countries like Thailand Indonesia and South Korea causing their currencies and stock markets to inflate. Novag Grats looked at the data for the economic and financial flows, which led him to a contrarian view. The economies were growing too fast and the financial inflows were getting ahead of themselves.

A bubble was forming and that was not sustainable. So he initiated a massive short position on the Thai currency in 1997. Just a few months later, the Asian financial crisis kicked off and the Ti Bot depreciated by more than 50% This was a massive win for the bank netting many millions of dollars of gains After this successful trade, Novag Gr's. stature within the bank increased massively.

He was promoted to be a partner, which gave him an equity stake in the company right before their IPO. This made him a multi-millionaire as he rose the ranks of Wall Street. He let the money and power go to his head. By his own admission, he was a wild parier, an excessive consumer of Alcohol and Other recreational substances.

His excessive partying eventually clashed with his professional responsibilities. In 2000, Less than 2 years after being promoted to partner, he was forced to resign. The bank made him sign a confidentiality agreement which bars him from Talking publicly about the exact reason, but he says that it was one of the most humiliating times of his professional career. After being fired from Goldman, he realized that he needed to turn his life around.

He voluntarily enrolled in a rehab program and stopped abusing drugs and alcohol. While he was forced to leave Goldman in disgrace, this was only due to his partying lifestyle, he was still well respected on Wall Street as a Savvy Trader So after a successful rehab, he was able to make a comeback. In 2002. he joined an asset management company called Fortress Investment Group Fortress operated a variety of investment funds focused on private Equity stocks, bonds, and currencies.

It charged management fees ranging from 1 to 3% per year and performance fees between 20 and 25% of gains. Novag Gratz was not a Founder, but he joined the company early, becoming a top five executive of the company and receiving a sizable Equity stake with his successful track record as a currency. Trader At Golden Sachs Novag Gratz was put in charge of Fortress's Global Macro Fund. This fund took leverage bets on currency exchange rates, interest rates, and stocks around the world.

Most investors take bets on individual companies analyzing their financial statements business business model Etc But as a macro investor, Novag Gratz took a bigger picture view he would look at Broad Economic Trends to make predictions about currency values and interest rates like how he predicted the Asian financial crisis back in the 9s. For the first 5 years, Novag Gratus Fund performed phenomenally. Between 2002 and 2007, it posted annualized returns of more than 133% Investors were rushing to put money into the fund and its asset swell to $8 billion by 2007, making it one of the biggest macro focused hedge funds in the world. By this point, Fortress as a whole had grown to managing $30 billion of client assets across its various funds.

That year, they generated approximately $1 billion of fee income. They took the company public on the New York Stock Exchange at a roughly $7 billion valuation. This made Novag Gratz a billionaire on paper. Unfortunately, Novag Gratz was not well positioned for the 2008 Financial crisis and his fund suffered a 22% loss.

It's unclear what specific Investments Novag Grats had made in 2008 but he later said that the collapse of L Brothers alone had cost the fund between $400 and $500 million. It's unclear if he was investing in Leman's stock or was using them as a counterparty. Either way, it was a complete disaster. Investors were furious with the losses and rushed to withdraw their money.

The fund had taken various illiquid positions that took months to wind down. Their liquid assets were not enough to satisfy their redemptions, so Fortress had to temporarily freeze withdrawals. The withdrawals, as well as a poor investment performance caused the fund's assets under management to freef. Fall By 2010, it had shrunk to $419 million, about 5% of its peak just 3 years prior.

Novag Grats attempted to make a comeback over the next few years, but had mixed results. As investors lost patience. They continued to redeem their funds and by 2014, its assets under management declined even further to 229 million. Novogratz needed to turn things around in 2014.

He thought he finally found his big opportunity in: Brazil At the time, Brazil was run by a left-wing president. Dilma Rusev Excessive government spending had caused High inflation and a depreciation of the currency. Novag Grats believed that Rusf would lose an upcoming election and be replaced by more fiscally responsible president. Rusev unexpectedly won reelection and the rally failed to materialize.

Despite his wrong prediction in the election, Novag Gratz doubled down on his Brazil bet thinking the Brazilian Central Bank could get inflation under control on its own. In this, too, he was mistaken. His Brazilian bets caused the fund to suffer an 18% loss in 2015. By this point, its assets under management dwindled to just 100 million.

At this point, investors had totally lost confidence in Novag. Gratz. He shut down his Global macro fund and resigned from Fortress. By this point, the hedge fund industry had become extremely competitive.

Institutional investors and high net worth individuals had hundreds of hedge funds to choose from. Given his disastrous run at Fortress, why would anyone invest with him ever again? Having been discredited in the traditional Financial World it looked like Novag Grats would be forced into an early retirement, but there was still one area of the financial markets that was still willing to accept him. Novogratz claims to have first started buying Bitcoins in or around 2013 due to its limited Supply He believed it had similar characteristics to gold and could provide a hedge against currency devaluations and economic instability. He believed that over time, large institutional investors would start allocating at least a small percentage of their portfolios to Bitcoin and other cryptocurrencies, which would put upwards pressure on their prices.

He also believed that cryptocurrencies would eventually be used for payments in other real world use cases. At the time, most investment Banks didn't want anything to do with crypto because they viewed it as unregulated and risky if the crypto industry was going to grow as much as Novag thought it would, there would be a huge gap in the market for a crypto focused. Investment Bank So in 2018, he created a company called Galaxy Digital and took it public on the Toronto Stock Exchange. He said that he wanted Galaxy to become the Goldman Sachs of crypto instead of doing a traditional IPO.

He did a so-called reverse takeover. Galaxy acquired a non-operating Shell company listed on the Toronto Stock Exchange called Bradar Pharmaceuticals and changed the name of the combined entity to Galaxy Digital. The process is kind of like a reverse merger with a Spack. The reason they did this is because Galaxy likely did not meet the requirements to do a traditional IPO.

Furthermore, they decide to list in Canada despite being headquartered in New York. This is because securi regulations are relatively more liberal in Canada Galaxy has three business units: Global Markets facilitates, Trading of cryptocurrencies and crypto derivatives for institutional clients. They also lend money to crypto companies and advise them on mergers and Acquisitions The second segment is asset management. They run both passive and active crypto funds which invest client money for a fee.

They also invest in some crypto projects with their own money. The final segment is digital Infrastructure Solutions This includes Bitcoin mining and other similar things. The quarterly and annual Financial results of Galaxy Digital are extremely volatile due to their large Holdings in cryptocurrencies and other crypto related Investments if we strip out all gains and losses in cryptocurrencies and Venture Investments we can get a sense of the profitability of the core business. Every year, since becoming a public company, the core business has lost money.

As it turns out, there's not that much demand for crypto, advisory and asset management, and the revenue they've been able to generate has not been enough to cover their operating expenses. During the Crypto bubble of 2020 and 2021, they made huge gains on their Holdings of cryptocurrencies, but suffered huge losses in 2022 when the bubble burst. Most most of their Venture Investments are in private companies and it's hard to tell from the outside how much they're actually worth. While Galaxy publishes few details of the crypto.

Holdings We do know that they invested heavily in the Teral Luna project between 2020 and 2022. We've made two videos about Teral Luna in the past: Linked In The description below. Long story short, it was a Ponzi scheme that offered a 20% yield on their fake stable coin. We know that Novag Grats was bullish on Luna as early as December of 2020 when he tweeted about the massive adoption of Tera Chai payment app in South Korea We now know that this was a fraud.

Chai did not use Tera's blockchain or any other blockchain for that matter. It was a lie made up by Tera founder to pump up the price of the coins Mike Novogratz fell for it hook, line and sinker Galaxy invested hundreds of millions of dollars into Luna coins and Novag Grat got a Luna tattoo on his arm. We don't know exactly how much galaxy lost on Luna but in the quarter that it imploded, they reported a $554 million loss mostly related to her digital asset Holdings Galaxy Also had 77 million deposited in FTX when the exchange exploded in November of 2022 For someone who's supposed to be one of the smartest guys in crypto, it's shocking that he fell for these two frauds. especially.

Luna If you watch our previous Luna videos, it's obvious in hindsight that it was a massive fraud. especially the part about the Chai payments app in South Korea Under existing South Korean law, it would not even be legal for a payment processor like Chai to use cryptocurrencies in any way. Mike Novogratz has a complex Legacy He has made some legendary trades, such as shorting the Thae bot right before the Asian financial crisis, but he also has a long list of disasters, including his ill-fated bets around the 2014 Brazilian elections. Since he entered the crypto industry, his Investments have become even more Reckless and the core business at Galaxy Digital has never been profitable in a lot of ways.

Novag Grat is emblematic of the entire crypto community seeking to make quick gains with little respect for the hard work of due diligence. All right guys, that wraps it up for this video. What do you think about Mike Novag Gratz Do you think Galaxy Digital will be around 5 years from now? Let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one! Wall Street Millennial Signing out.