Galaxy Digital Sells its Block.One Stake

The cryptocurrency merchant bank founded by Michael Novogratz, Galaxy Digital announced on May 21 that it had sold its stake in Block.One, the creator of the top cryptocurrency EOS, for a sum of $71.2 million. The company stated that it had closed the transaction after a tender offer had been made on April 18.

Galaxy Digital stated that it made a 123% return on its realized investment and that now, with the transaction complete, its remaining shares in Block.One would no longer have a material investment position.

Continued Partnership

Michael Novogratz, in the announcement, stated that the decision to accept Block.One’s tender offer was taken so that the company could rebalance its portfolio. This was done so that Galaxy Digital could maintain a proper level of diversification after Block.One’s position increased due to it outperforming all the other investments in the bank’s portfolio.

Novogratz also stated that this sale did not mean that his company was cutting ties with Block.One. He said that the two companies would continue to partner on other business ventures such as the Galaxy-EOS venture capital fund. This VC fund focuses on backing startups that use the EOS blockchain to develop apps.

Another joint venture that the two companies would continue to partner in is the EOSIO Ecosystem Fund, which was launched in January 2018 with $325 million.

Block.One’s Buyback Program

The buyout of Galaxy Digital’s shares is a part of Block.One’s buyback program, wherein the company is looking at retrieving 10% of its shares from investors.

According to mainstream media reports, the company’s buyback offer is valued at $2.3 billion, which is a 66-times increase from what it was valued in 2017, during its seed funding round. During the seed funding round, Block.One’s shares were offered at $22.5. Now, those shares are being bought back by the company at $1,500 per share, which is a whopping 6,567% return to the company’s earliest investors.

Based on the letter the company sent to its investors on March 19, as of the end of February, Block.One had $3 billion in assets, comprising of cash as well as investments.

The emailed letter also stated that the company’s holdings, which came to about $2.2 billion, were mostly invested in fiat assets that were liquid. Of these, most of the investments had been made in US government bonds.

The company also revealed that it was holding 140,000 BTC as part of its investments, making it one of the largest holders of the world’s most valuable crypto.