Faces of crypto: Michael Novogratz, Galaxy Digital CEO
Mike Novogratz is one of the loudest crypto advocates with a diverse experience in finance and a passion for Bitcoin. A Wall Street veteran, former helicopter pilot, and wrestling enthusiast, he wholeheartedly believes in the future of blockchain. Learn more about the outspoken Galaxy Digital CEO.
Early years and education
Michael Novogratz was born on November 26, 1964. The third son of Robert Sr., a West Point football lineman, he grew up in Alexandria, Virginia, with six siblings. Novogratz attended Fort Hunt High School and earned an AB in Economics.
At an early age, Novogratz developed a fascination with wrestling — he became the state of Virginia high school wrestling runner-up and later Princeton wrestling captain. In 1986 and 1987, he was first team All-Ivy League and qualified for the National Collegiate Athletic Association (NCAA) wrestling championships.
Experience in financial markets
Before getting into crypto, Novogratz served as a helicopter pilot in the New Jersey National Guard, worked as a Goldman Sachs partner, and was a hedge fund manager at Fortress Investment Group.
Novogratz was hired by Goldman Sachs in 1989, first as a short-term bond salesman. He went on to become head of fixed income, currencies, and commodities risk in Asia and president of Goldman Sachs Latin America. Those jobs involved a lot of time abroad.
During his stint in Asia between 1992 and 1999, Novogratz managed sales in Tokyo. Subsequently, he oversaw Goldman's trading desk in Hong Kong. In 1998, Goldman made him a partner. Then, in 2000, after eleven years at Goldman and one year after its IPO, Novogratz left the banking giant to begin an adventure of his own.
Fortress Investment Group LLC
In 2002, Novogratz founded the macro hedge fund unit of Fortress Investment Group. He worked as the co-chief information officer of macro funds and later as principal and director of Fortress Credit Corporation.
This alternative Investment company ran private equity and hedge fund strategies. It went public in 2007 but saw its share price dwindle amid the credit crisis before being acquired by SoftBank. Despite costing $35 at the IPO, the stocks plunged to $1.87 on December 3, 2008, after Novogratz's Drawbridge Global Macro fund halted withdrawals.
Novogratz and his associates, including Peter Briger, another ex-Goldman star who co-managed the hedge funds, lost hundreds of millions. Eventually, in 2015, Michael Novogratz resigned as the firm's principal and shut down the failed flagship macro fund, notorious for its wrong bets on the Swiss franc and Brazilian assets.
Founder of Galaxy Digital Holdings Ltd.
Originally, Novogratz intended to launch a cryptocurrency investment firm called Galaxy Digital Assets Fund in December 2017. However, he put those plans on hold, citing unfavorable market conditions, and established Galaxy Digital in January 2018.
The company aimed to institutionalize the blockchain space, rendering asset management services, advice, and principal investments. In its first year, it made a loss of $272.7 million, including $136 million of crypto trading losses over the first nine months.
In November 2018, the firm hired Ian Taylor, formerly a Goldman Sachs real estate broker, to help it launch a real estate tokenization branch. The company did not announce any real estate transactions afterward. However, it invested in a virtual real estate firm called Republic Realm in 2021.
In 2020, a crypto sector rebound boosted Galaxy Digital's performance by 75% compared to a year prior. By the end of the fourth quarter, it boasted $407.4 million in assets under management. Galaxy Digital also announced plans for CI Galaxy Bitcoin Fund, a Canadian closed-end investment fund developed in collaboration with CI Global Asset Management. It started trading on the Toronto Stock Exchange in December.
In 2021, Galaxy Digital graduated from the Toronto Stock Exchange's TSX sandbox, a regulatory testing ground for companies "that may not generally satisfy the requirements and guidelines of TSX." Its shares have since been traded on TSX.
However, losses continued to plague Galaxy: it lost $182 million in 2021 and $554 million in the second quarter of 2022 alone. Today, it remains one of the few crypto companies required to publish financial results.
Mike Novogratz is one of the most committed crypto bulls who wholeheartedly believes in Bitcoin. He may have been an early investor, but when he bought his first BTC is unclear. In 2017, he claimed he had made $250 million on crypto and kept 20% of his net worth in digital assets — specifically, Bitcoin and Ethereum. According to a New York Magazine interview, that share grew to 85% in 2021.
Novogratz said, "it's just that cryptos had a move that is a once-in-a-generation move, and I think people should understand that it's not going to keep happening over and over. Like this idea that we've gone from not-an-asset-class to an asset class only can happen once." He has even predicted that BTC would cost $500K in 2024.
Mike Novogratz actively promotes Bitcoin in his media appearances. For example, at a 2022 crypto conference, he boasted about being "the only guy in the world that's got both a Bitcoin tattoo and a Luna tattoo." Ironically, instead of shooting to the moon, the Luna token (UST) depegged from the US dollar, losing almost all of its value a few weeks later. Lately, Novogratz has told Fortune he would be "the happiest guy" if BTC ended the year at $30K.
Initially, Novogratz recommended investors allocate 1% of their holdings to BTC. In 2020, he raised that threshold to 3% and then 5% based on improvements in Bitcoin's performance and the global economy. Speaking to CNN, he said, "We're at the beginning innings of rebuilding the infrastructure that American and global business will be done on in the future." Novogratz believed Bitcoin was "fulfilling its role as digital gold."
Michael Novogratz's net worth
Novogratz landed on Forbes' billionaire lists in 2007 and 2008 — in the 317th ($1.5 billion) and 962nd ($1.2 billion) positions, respectively. However, by 2012, the declining Fortress' stock price had caused his net worth to shrink to $500 million.
Michael Novogratz reportedly lost 64% of his net worth in 2022. When the FTX exchange filed for bankruptcy, Galaxy Digital had $77 million exposure, equal to 4% of its capital. According to Fortune, Novogratz's net worth is now $1.8 billion as of December 2022.
Non-profits and other projects
Michael Novogratz serves as the Chairman of The Bail Project, his family's foundation. Its mission is to combat injustice and disparities in the US pretrial system. It helps people who cannot afford bail avoid incarceration, while the end goal is ending cash bail altogether. As of February 2023, The Bail Project is powered by almost half a million individuals, companies, and foundations.
Novogratz is also the honorary chairman of the USA Wrestling Foundation and the chairman of Beat the Streets, a non-profit he founded. This organization supports wrestling programs in New York City public schools to "develop the full human and athletic potential of our urban youth."
Finally, the Galaxy Digital founder is a member of the Board of Overseers at NYU Langone Medical Center and a board member of the Jazz Foundation of America and Princeton Varsity Club.