Michael Novogratz cuts staff as Galaxy Digital (GLXY), the crypto-focused financial services firm shares, fell by more than half in the past year. 

We are witnessing the equivalent of the dotcom bust, which played out almost two decades ago, in the crypto space.

As the value of capital becomes appreciated, with central bank rate hikes, all the malinvestment due to irrational exuberance, along with the snake oil charlatans selling nothing but hype, are being exposed. The same investors who failed to spot opportunity in Amazon several decades ago also don’t see the opportunity in crypto blockchain technology today.

Warren Buffett Quotes … Only when the tide goes out do you discover who’s been swimming naked.

“We are witnessing the equivalent of the dotcom bust, which played out almost two decades ago, in the crypto space”

MICHAEL NOVOGRATZ

Michael Novogratz cuts staff as the market sobers up

So another FTX Ponzi exchange goes bankrupt, after the gaping holes in the troubled crypto exchange account were exposed by Binance who had only yesterday walked away from a letter of intent to buy, bailout FTX Notorious Sam Bankman-Fried was the CEO of FTX, the second largest crypto exchange in the world. But the 30-year-old crypto billionaire investors fraudulently used client funds to make side bets.  

What was the SEC doing?

But in the age of tighter central bank liquidity, those investments turned to losses. Investors fearful of losing their capital pulled funds from their accounts, in what turned out to be similar to a bank run.

FTX collapse is a combination of fraud, criminality, and investor irrational exuberance. So, if Sam Bankman-Fried does not do time for his crime, it is because he is part of the club.  

“another FTX Ponzi exchange goes bankrupt, after the gaping holes in the troubled crypto exchange account were exposed”

WEALTH TRAINING COMPANY

In a backdrop of tighter liquidity, deleveraging, and flushing out fraudulent operators, Michael Novogratz cuts to staff

Michael Novogratz plans to cut at least 20% of its global workforce, according to four people familiar with the matter.

“While our industry continues to face macroeconomic headwinds, Galaxy remains focused on building for the future state of institutional adoption and enhancing long-term shareholder value. We are always considering optimal team structure and strategy and will share plans when finalized,” a Galaxy spokesman told CoinDesk via email.

The crypto winter has been bitter in an investment climate that has been dire, the words in four decades for investors. 

Even traditional investment 60-40 Portfolios, with 60 percent in bonds and 40 in stocks have experienced the worst return in a century. 

As the global economy goes into a tailspin, layoffs are spiking in the economy.    

CoinDesk estimates that as of Oct. 14 11,700 crypto jobs had been lost since the beginning of April, based on media reports and press releases. Crypto exchanges Coinbase (COIN), Gemini, and Crypto.com, as well as New York Digital Investment Group, have all made significant job cuts.

“Galaxy reported a second-quarter net loss of $554.7 million, more than the triple loss of the year-earlier quarter, and assets under management dropped 40% from the first quarter” – Wealth Training Company

Michael Novogratz cuts staff as Galaxy faces sizable losses

In August, Galaxy reported a second-quarter net loss of $554.7 million, more than the triple loss of the year-earlier quarter, and assets under management dropped 40% from the first quarter.

Novogratz has said that he expected Galaxy to finish the year with more than 400 employees, compared with fewer than 300 at the start of 2022.

“We are a growth company,” Novogratz said on the second-quarter earnings call. Galaxy is investing in people, products, and engineering teams not only for the near term but for years to come, he said.

Galaxy’s shares are down 80% in the past year.