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Mike Novogratz Says Crypto Market Battling a ‘Full-Fledged Credit Crisis’
Summary: Mike Novogratz, founder and CEO of Galaxy Digital, said the cryptocurrency industry is in the midst of a “full-fledged credit crisis,” according to a Bloomberg report, as a plethora of crypto companies are experiencing insolvency issues. The crypto hedge fund CEO also noted that he was “darn wrong” about the magnitude of the leverage in ...
Mike Novogratz, founder and CEO of Galaxy Digital, said the cryptocurrency industry is in the midst of a “full-fledged credit crisis,” according to a Bloomberg report, as a plethora of crypto companies are experiencing insolvency issues.
The crypto hedge fund CEO also noted that he was “darn wrong” about the magnitude of the leverage in the system.
“What I don’t think people expected was the magnitude of losses that would show up in professional institutions’ balance sheets and that caused the daisy chain of events,” Novogratz said at a crypto summit on Tuesday. “It turned into a full fledged credit crisis with complete liquidation and huge damage on confidence in the space.”
The primary companies who experienced immense losses were crypto lending protocol Celsius, who reported a $1.2 billion hole in their balance sheet, and crypto hedge fund Three Arrows Capital (3AC). Both of their troubles started when the Terra ecosystem collapsed, with their two, once valuable cryptocurrencies, plummeting to mere pennies in the course of a week.
Not only did this affect Celsius and 3AC, but countless other companies that were either exposed to the Terra network, Celsius, 3AC or a combination of them.
Not only did Novogratz talk about institutional investors that lost significant funds in the market crash, he also said his heart doctor lost $1 million in the Celsius crash. Celsius filed for Chapter 11 bankruptcy last week.
Novogratz, who was once a big promoter of Terraform Labs, in the aftermath of the Terra network collapse, learned that both the industry and retail investors had an extremely limited concept of risk management.
Novogratz partially faulted regulators for not doing enough to protect investors, by giving institutions the ability to take on too much leverage. While he admitted he isn’t sure what the U.S. securities and exchange commission (SEC) could have or should have done, he emphasized that they didn’t do enough to protect retail investors.
He also claimed the crypto fall-out is analogous to the collapse of the Lehman Brothers.
Author: Tyler Irvin
Tags: Celsius Network,Galaxy Digital,Mike Novogratz,Terra,Three Arrows Capital
Link: Mike Novogratz Says Crypto Market Battling a ‘Full-Fledged Credit Crisis’ [Copy]
