SecProbe.io

United States securities and exchange commission logo
November 16, 2023
Michael Novogratz
Chief Executive Officer
Galaxy Digital Inc.
300 Vesey Street
New York, NY 10282
Re:Galaxy Digital Inc.
Amendment No. 2 to Registration Statement on Form S-4
Filed August 11, 2023
File No. 333-262378
Dear Michael Novogratz:
            We have reviewed your amended registration statement and have the following
comments.
            Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe a comment applies to your facts and circumstances
or do not believe an amendment is appropriate, please tell us why in your response.
            After reviewing any amendment to your registration statement and the information you
provide in response to this letter, we may have additional comments. Unless we note otherwise,
any references to prior comments are to comments in our May 12, 2023 letter.
Amendment No. 2 to Registration Statement on Form S-4
General
1.We note your response to comment 9 that Blue Fire Capital Europe Cooperatief U.A.,
now rebranded to Quantitative Principal Trading, engages in your "quantitative trading
activity with respect to digital assets that are potentially securities" and that it is primarily
engaged in trading activity with respect to bitcoin and ether.  Please revise your disclosure
to clarify what you mean by the crypto assets are "potentially securities."
2.We continue to evaluate your responses to comments 50, 59, 72 and 84 and may have
further comments.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 2
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 2
A Letter from Michael Novogratz, our Founder and Chief Executive Officer, page iv
3.We note your response to comment 20 and re-issue in part. Please expand to provide
recent support for your statement that the entrance of institutions and human capital into
the space continues.
Questions and Answers about the Proposed Transactions
General Questions and Answers for GDHL Shareholders, page 1
4.Please refer to comment 12 of our letter dated November 5, 2021.  Please revise to
disclose the number of Class B ordinary shares of GDHL that will be issued in connection
with the Governing Documents Amendment. Please make corresponding changes
throughout the document as applicable. Further, file the form of proxy and form of written
consent that will be used in relation to the solicitation of GDHL shareholders.
Prospectus Summary
Information About Galaxy
Our Products and Services, page 16
5.We note your response to comment 21. Please revise your disclosure to address the
following:
•Discuss the material terms of any agreements you have with third-party custodians;
•Describe the terms and provisions of any insurance policies that will cover the
customer digital assets that are held by third-party custodians, including the amount
of coverage, term, termination provisions, renewal options and limitations on
coverage. To the extent there are none, please revise your disclosure to so clarify and
expand your risk factor disclosure as appropriate; and
•Clarify the usage of private keys and your statement that Galaxy may hold a shard of
the private key, in light of your disclosure and response that in accordance with your
customer agreements, GalaxyOne customer digital assets will now only be held in
custodian omnibus accounts.
The Cryptoeconomy, page 18
6.Please revise to provide support for your statements that "Ethereum is home to the largest
share of newer application categories" and "bitcoin and ether together account for more
than 65% of the asset class’s market capitalization today."  Please revise to provide
support for your statement that "[t]he number of world wide individual cryptocurrency
users was 425 million as of January 2023, up from 295 million in January 2022."
Government Regulation
United States, page 30
7.Please explain if Galaxy Digital Partners LLC uses the advisory services of GDCM LP,
and if so how.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 3
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 3
Canada and other jurisdictions, page 31
8.We note your statement that “GDH LP’s diversified asset management firm dedicated to
the cryptocurrency and blockchain sectors intends, in the future, to register or file for a
registration exemption in Canada to sell or distribute securities, or to advise with respect
to investments in securities, or to act as an investment fund manager, if required.”  Please
identify the firm you are referring to here.
Risk Factors, page 49
9.We note your response to comment 26 in which you state that “[c]ertain components of
Galaxy’s counterparty, credit, liquidity, and risk assessment processes were adjusted” in
light of recent crypto asset market conditions.  To the extent material, please revise your
disclosure to describe any gaps your board or management have identified with respect to
risk management processes and policies in light of recent crypto asset market conditions
as well as any changes they have made to address those gaps.
Risks Related to Our Operations
A determination that a digital asset is a "security", page 52
10.We note your disclosure regarding the lawsuits against Coinbase and Binance and your
reference to “a number of digital assets that the SEC alleges to be unregistered
securities.”  Please revise to clarify that your business supports certain of the assets
identified in those complaints, disclose the particular digital assets in those complaints that
you support and discuss the impact this may have on your business, financial condition
and results of operations.  Please also revise this risk factor to summarize the disclosure
you have included in the second paragraph of the Legal Proceedings section in order to
provide appropriate context for the risks you discuss.
Our process for analyzing whether or not a particular digital asset is a security, page 56
11.We note your response to comment 28 and re-issue in part. Please disclose whether all
digital assets you transact in have been re-examined under your current procedures or
whether procedures you implement are prospective only, and discuss related risks as
applicable. Please also revise to discuss the policies and procedures that will apply,
including what actions you will take, if you determine that one of your products or
services supports an asset that is deemed to be a security.
Risks Related to Our Business Lines
Our venture investments business within asset management, page 71
12.Please describe who, either within the Company or outside of the Company, makes
decisions about your equity investments in portfolio companies.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 4
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 4
Risks Related to Cryptocurrencies and Digital Assets
The continuing development and acceptance of digital assets and distributed ledger technology,
page 78
13.We note your response to comment 3 that you do not currently have a framework in place
to offer staking services to customers, and are currently exploring ways to offer staking
services in the future in compliance with applicable securities laws. Please revise to
disclose the expected timeline and associated costs and risks related to the development
and operation of a staking program. To the extent that you may offer staking to your
customers but do not have a timeline related to the development of the staking program,
please disclose the factors you will consider in determining whether and when to offer a
staking program to your customers.
The U.S. federal income tax treatment of transactions in digital assets is unclear, page 83
14.Please revise to discuss the IRS’ recent proposed regulations relating to the reporting of
crypto asset transactions by brokers.
Short sales and borrowings of digital assets pose additional risks, page 85
15.Please expand to disclose the regulatory risks to which borrowing operations may be
subject.
Risks Related to Regulation, Information Systems and Privacy Matters
Our and our third-party service providers' failure to safeguard and manage, page 98
16.We note your response to comment 30 and re-issue in part. Please revise to discuss the
applicability of your policies related to know-your-customer, anti-money laundering, and
safeguarding of assets for each of your business lines, and discuss how they are
implemented.
Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies, page
99
17.Please revise to update this risk factor for recent legislative developments.  As an
example, the Lummis-Gillibrand Responsible Financial Innovation Act was re-introduced
in the Senate in July 2023 and the digital asset market structure bill initially released as a
discussion draft has since been introduced into the House and has advanced out of the
House Financial Services and Agriculture Committees.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Our Businesses, page 170
18.Please tell us which crypto assets are included in your different lines of businesses,
including without limitation, whether each line of business deals with all of the crypto
assets listed beginning on page 207, and whether each line of business deals with NFTs.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 5
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 5
19.We note your disclosure on pages 17, 171, and 213 that you provide "critical network
validator services."  Please tell us, and revise future filings as applicable, to describe in
detail the critical network validator services you provide and revenues recognized in
association with these services in the periods presented.
Results of Operations, page 178
20.Please revise your next amendment to discuss, in more fulsome detail, the reasons for
material changes in Statement of Operations line items from period-to-period.  For
example, we noted material changes to line items such as digital assets sales revenue, net
gain/(loss) on digital assets, net gain/(loss) on investments, digital assets sales cost, and
impairment of digital assets in the periods presented that included very limited discussion
in the narrative section, such as your analysis on page 183 that, "net revenues were $120.5
billion, a decrease of $15.6 billion, or 11%, for the year ended December 31, 2022,
compared to the year ended December 31, 2021.  This was driven by decreased digital
assets sales revenue." Please enhance with a narrative explanation of your financial
statements that enables investors to see the company through the eyes of management, and
provide the context within which financial information should be analyzed. Refer to Item
303 of Regulation S-K and SEC Release 33-8350.
21.We note that you had assets under management (AUM) of $2.4 billion at March 31, 2023.
Please revise your next amendment to provide a rollforward of AUM showing the
beginning balance, gross inflows, gross outflows and market appreciation/depreciation to
arrive at an ending AUM balance.
22.We note that your discussion of net income/loss on pages 181, 184, and 187 appears to be
related to net income/loss attributed to unit holders and not GAAP net income that
includes income/loss attributable to noncontrolling interests. Please revise your disclosure
to properly identify this income and discuss the impact of noncontrolling interests on total
net income/loss.
Quantitative and Qualitative Disclosures about Market Risk
Credit and Counterparty Risk, page 190
23.Please revise to clarify the nature of the collateral provided by digital asset borrowers,
including without limitation, whether permissible collateral includes all the digital assets
listed beginning on page 207.
24.We note your disclosure that you participate in "lending and posting risk margin with
trading exchanges and platforms," and that you post risk margin with digital asset trading
platforms to participate in activities within the trading platform.  Please clarify whether
"trading exchange" and "trading platform" carry different definitions, and if so, whether
you post risk margin with trading exchanges in addition to trading platforms.  Please also
expand to describe the activities referred to here.  Additionally, clarify whether the trading
exchanges and/or platforms referred to are located within the U.S. or elsewhere.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 6
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 6
Information About Galaxy
Our Products and Services
Global Markets, page 204
25.We note your disclosure here and on pages 16 and 236 that “Galaxy holds its customers’
cash balances in omnibus client custodial accounts…To the extent that client cash
balances are subject to lending arrangements with Galaxy where Galaxy has the right to
rehypothecate, the cash for the loaned balances is moved into Galaxy’s accounts with one
or more banks that are members of the FDIC.”  Please revise to clarify the extent to which
these balances are FDIC-insured (e.g., whether customers receive pass-through coverage).
 In addition, for the cash balances where Galaxy has the right to rehypothecate, please
revise to clarify whether the loaned balances are moved to and remain in Galaxy’s bank
accounts, or if those funds may subsequently be used by Galaxy for other purposes.
Digital Infrastructure Solutions, page 213
26.We note your response to comment 47 and re-issue in part. Please revise to include your
response that historical data are not representative of your current operations.
27.We note your response to comment 48 and re-issue in part. Please expand your disclosure
to:
•Discuss the risks posed by the volatile nature of Bitcoin mining profitability and
effects on material indicators of performance, including without limitation, cost of
electricity, miner efficiency and profitability; and
•Provide the breakeven analysis of the cost of inputs to mine one Bitcoin with the
price of Bitcoin as of the most recent practicable date, or provide a cross reference to
the relevant section in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” that includes such analysis.
The Cryptoeconomy
Features and Applications of Digital Assets, page 214
28.We note your disclosure here and on page 19 that “[t]he advantage of blockchains is the
ability to launch and operate a marketplace without the need for an intermediary” and the
decentralized nature of blockchains “allow for new types of business models without
intermediaries that operate globally.”  We also note your disclosure on pages 21 and 220
that “[t]hroughout the failures of centralized digital asset trading platforms and lenders in
2022, DeFi applications performed admirably and without disruption, highlighting the
benefits of financial applications devoid of human administrators.”  Please revise to
qualify these statements, as it is not clear that digital asset trading platforms and DeFi
applications are operated entirely without intermediaries or human administrators, or that
all DeFi applications “performed admirably and without disruption” in 2022.

 FirstName LastNameMichael Novogratz
 Comapany NameGalaxy Digital Inc.
 November 16, 2023 Page 7
 FirstName LastName
Michael Novogratz
Galaxy Digital Inc.
November 16, 2023
Page 7
Transacting on DeFi, page 220
29.We note your response to comment 53. Please revise to provide a more detailed discussion
of how liquidity pools operate, what yield farming entails, and how rewards are earned.
As part of your disclosure, be sure to include discussion