Ms. Donna Milia reports

GALAXY DIGITAL ANNOUNCES SECOND QUARTER 2019 FINANCIAL RESULTS AND PROVIDES CORPORATE UPDATES

Galaxy Digital Holdings Ltd. has released both Galaxy Digital Holdings LP's (GDH LP) and its financial results for the three and six months ended June 30, 2019, as well as the partnership's corporate updates through the date of this press release. All figures are in U.S. dollars unless otherwise noted.

"Looking back at the second quarter, I am very pleased with our latest accomplishments across our business lines, including our significant progress in obtaining critical regulatory licences and disciplined deployment of capital into a number of attractive investment opportunities," said Michael Novogratz, founder and chief executie officer of Galaxy Digital. "We saw a notable increase in activity across each of our operating businesses, as we were able to leverage the platform that we've built to capitalize on the improving digital assets market. Looking ahead, we remain focused on continuing to strategically scale our business and positioning ourselves to be opportunistic as the space institutionalizes and evolves."

Corporate updates

• As previously announced, Christopher Ferraro was appointed the president of the company and GDH LP at the end of June. Mr. Ferraro had been serving as the chief investment officer of Galaxy Digital with responsibility for overseeing principal investments, research, and corporate mergers and acquisitions. Prior to joining the firm, he was a managing director and partner at HPS Investment Partners, where he worked within the direct lending and special situations group. Mr. Ferraro has assumed responsibility and oversight for corporate operations. Julie Coin, chief operating officer, has left Galaxy Digital to pursue other opportunities.
• The company recently made progress on a number of regulatory licences to support its businesses.
  • In July, 2019, FINRA granted the business expansion of GDH LP's broker dealer, Galaxy Digital Advisors LLC. The approval permits Galaxy Digital Advisors to act as an underwriter to registered public offerings of equity, debt or other corporate securities in the United States. This adds to its existing abilities to lead private placements of securities as a placement agent, and to provide advice on mergers and acquisitions.
  • In July, 2019, Galaxy Digital Capital Management LP (GDCM) was granted registered investment adviser status by the U.S. Securities and Exchange Commission (SEC).
  • In August, 2019, Galaxy Digital U.K. Ltd. was approved by the Financial Conduct Authority as an appointed representative.

Business highlights

• During the second quarter of 2019, the principal investments team closed three new investments and seven follow-on investments, representing $3.4-million and $9.0-million of invested capital, respectively.
  • Investments (including loans purchased) made during the second quarter bring capital deployed for the six months ended June 30, 2019, to $19.5-million represented by six new investments and nine follow-on investments.
  • Investments made (including loans purchased) from inception through June 30, 2019, total $152.4-million and are represented by 31 new and 19 follow-on investments.
• Since the start of 2019, GDCM has been capitalizing on the improvement in the digital asset markets, generating inflows into the Galaxy Benchmark Crypto Index Fund (the GBCIF) and making meaningful progress toward future commitments from large institutional investors. The GBCIF is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the BGCI), an index co-branded and administered by Bloomberg which is designed to track the performance of the largest, most liquid portion of the digital asset market. The BGCI has returned 7.96 per cent and 110.15 per cent for the quarters ended March 31, 2019, and June 30, 2019, respectively, while returning 61.35 per cent on a year-to-date basis through Aug. 20, 2019.
• Additionally, during the second quarter of 2019, the Galaxy EOS VC Fund LP made investments in Out There Labs Inc., Azarus Inc., FinCo Services Inc., Matcherino Inc., Locks and Keys Inc., and a follow-on investment in AlphaPoint Corp.
• As previously disclosed, as of June 30, 2019, GDCM had assets under management (AUM) of $393.9-million inclusive of committed capital in a closed-end vehicle. The AUM consists of: (i) GBCIF -- $18.2-million; (ii) EOS VC Fund committed capital -- $325.0-million; and (iii) Galaxy CM I Fund LP -- $50.7-million. Changes in AUM are generally the result of performance, contributions, withdrawals and capital commitments financed from one vehicle to another.
  • In August, 2019, GDCM ceased operations of its third party cash management strategy. As the digital asset and cryptocurrency industry has continued to mature, access to traditional cash management and banking services have become more readily accessible. As a result, GDCM determined it would discontinue efforts in marketing and managing this strategy in favour of scaling its higher margin fund strategies. As a result, the cash management fund will be liquidated, with the investor being fully redeemed effective Aug. 31, 2019, and AUM is expected to decline by the $50.7-million that was in the fund. The fee structure to GDCM on the cash management fund was equivalent to 50 basis points on an annualized basis, calculated based upon the average balance outstanding.
• During the first half of 2019, the partnership's trading business, Galaxy Digital Trading (GDT), leveraged momentum from 2018 to further solidify its position as an institutional crypto trading leader. GDT's growth can largely be attributed to both new products offerings in the business's full-service platform, as well as additional resources to support operations and on boarding. These enhancements, including bespoke liquidity solutions, unique market insights and proprietary research, have attracted new institutional-level counterparties while driving revenues.
  • Products and liquidity solutions: GDT continued to expand its product suite to include lending and borrowing, and derivative products. Greater connectivity across products and relationships has also allowed for enhanced trading strategy views and market commentary.
  • On boarding and operations: GDT added new resources in compliance and operations to accelerate the on boarding process and alleviate the growing backlog of new counterparties. GDT has seen a 60-per-cent increase in the number of actively trading, on-boarded counterparties in the second quarter of 2019 over the prior quarter. This group includes a diverse, yet strategic group of the largest crypto funds, venture capital funds, digital asset mining companies, blockchain companies, family offices and high net-worth individuals.
  • Market insights: In conjunction with Galaxy Digital Research, GDT has increased the frequency of market commentary and trading strategy content to satisfy the demand from counterparties for perspective to augment their investment and risk management process.
• The advisory services business made meaningful progress during the quarter toward its strategic goal of becoming the leading corporate finance and strategic advisory firm in the blockchain technology and digital assets sectors. The advisory services business has a number of potential financing transactions in various stages of execution, and its investment banking backlog grew compared with the end of the first quarter of 2019.

Select GDH LP's financial highlights (Q2 2019)

• As of June 30, 2019, digital assets, including digital assets posted as collateral, stood at $190.4-million, an increase from $120.6-million as of Dec. 31, 2018. This increase was primarily due to the increase in the fair value of the digital assets during the period.
• Investments decreased $27.4-million to $151.9-million as of June 30, 2019. The decrease was primarily a result of the partial sale of Block.one shares, partially offset by unrealized gains on certain other investments during the period as well as $14.5-million of new capital deployed by the principal investments team.
• Total equity increased by $141.8-million during the six-month period to $447.5-million as of June 30, 2019, primarily due to $126.6-million of net comprehensive income and further increased by $17.1-million of equity based compensation which did not have a net effect on equity due to the accounting treatment for equity-based compensation.
• As of June 30, 2019, the partnership's net book value per unit was approximately $2.07 (Canadian) ($1.57 (U.S.)) representing an increase of approximately 40 per cent as compared with $1.48 (Canadian) ($1.09 (U.S.)) as of Dec. 31, 2018.
• For the three months ended June 30, 2019, net comprehensive income was $113.8-million, as compared with net comprehensive income of $35.0-million for the three months ended June 30, 2018. The current quarter income was largely a result of realized and unrealized gains on digital assets, slightly offset by the quarter's operating expenses. The net comprehensive income for the three months ended June 30, 2018, was primarily a result of unrealized gains on investments. For the six months ended June 30, 2019, net comprehensive income was $126.6-million, as compared with net comprehensive loss of $99.0-million for the six months ended June 30, 2018. The current year-to-date income was largely a result of realized and unrealized gains on digital assets, slightly offset by the year-to-date operating expenses. The net comprehensive loss for the six months ended June 30, 2018, was primarily a result of unrealized and realized loss on digital assets.

  
                                                 Three months ended   June 30,       Six months ended June 30,
                                                         2019            2018            2019            2018
Income (loss)
Advisory and management fees                       $1,329,700      $1,303,302      $2,850,211      $1,333,213
Net realized gain (loss) on digital assets         98,099,376      (1,139,007)    115,570,500     (14,665,850)
Realized gain on investments                       38,100,635               -      38,100,635               -
Interest income                                       920,159         296,149       1,625,922         297,074
Other income                                        5,090,313               -       5,699,309          19,822
                                                  143,540,183         460,444     163,846,577     (13,015,741)
Operating expenses
Equity based compensation                           6,822,269               -      17,143,772               -
Compensation and compensation related               7,725,305       7,808,602      14,679,470      14,116,184
Professional fees                                   1,011,301       1,455,082       3,616,627       3,229,982
General and administrative                          1,887,780       1,490,397       4,409,070       2,963,020
Interest                                              938,928       2,325,574       1,627,254       2,984,328
Insurance                                             330,254         536,790         757,104       1,271,790
Director fees                                          50,000               -         100,000               -
                                                  (18,765,837)    (13,616,445)    (42,333,297)    (24,565,304)

Net unrealized gain (loss) on digital assets       11,613,204       1,816,396      10,948,674     (83,724,017)
Net unrealized gain (loss) on investments         (22,724,996)     44,755,752      (5,822,225)     20,717,616
Unrealized foreign currency gain                      189,526       1,566,885         280,598       1,566,885
Realized foreign currency loss                        (89,226)              -        (199,738)              -
                                                  (11,011,492)     48,139,033       5,207,309     (61,439,516)
Income (loss) for the period                     $113,762,854     $34,983,032    $126,720,589    $(99,020,561)
Income (loss) attributed to
Unit holders of the partnership                   107,964,998      34,983,032     120,535,626     (99,020,561)
Non-controlling interest                            5,797,856               -       6,184,963               -
                                                 $113,762,854     $34,983,032    $126,720,589    $(99,020,561)
Other comprehensive income (loss)
Foreign currency translation adjustment                 4,666               -         (88,268)              -
Comprehensive income (loss) for the period       $113,767,520     $34,983,032    $126,632,321    $(99,020,561)
Comprehensive income (loss) attributed to
Unitholders of the partnership                   $107,969,664     $34,983,032    $120,447,358    $(99,020,561)
Non-controlling interest                            5,797,856               -       6,184,963               -
                                                 $113,767,520     $34,983,032    $126,632,321    $(99,020,561)

This press release should be read in conjunction with (i) GDH LP's management discussion and analysis and condensed consolidated interim financial statements for the three and six months ended June 30, 2019, and (ii) GDH Ltd.'s management discussion and analysis and condensed consolidated interim financial statements for the three and six months ended June 30, 2019, which have been filed on SEDAR.

About Galaxy Digital Holdings Ltd.

Galaxy Digital Holdings' only significant asset is a minority investment in GDH LP. GDH LP is a diversified, multiservice merchant bank dedicated to the digital assets and blockchain technology industry. GDH LP's multidisciplinary team has extensive experience spanning investing, portfolio management, capital markets, operations and blockchain technology. GDH LP currently operates four distinct business lines, which include: trading, asset management, principal investing and advisory services.

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