Mike Novogratz’s Galaxy Digital targets Europe for crypto expansion

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US billionaire Mike Novogratz’s crypto group Galaxy Digital is expanding into Europe after a crackdown by US regulators sparked a search for more friendly jurisdictions.

The group has appointed Leon Marshall, a former executive at crypto broker Genesis, as its first head of Europe. His aim is to build a regional operation from London while rivals retreat in the face of the sustained downturn in digital asset prices.

Marshall told the Financial Times that European progress in building legal frameworks for trading digital assets had been a crucial factor in its decision.

Earlier this year the EU passed its sweeping Mica crypto regulation, aimed at providing guardrails for the industry and protection for investors. Under prime minister Rishi Sunak, the UK is also vying to become a crypto hub.

The moves contrast sharply with the US, where crypto rules are fragmented and regulators have clamped down aggressively on the market, filing a string of charges against top exchanges, including Binance and Coinbase.

“The European market demand that we’re seeing, combined with the regulatory framework established by Mica, is robust,” Marshall said. “That makes Europe a desirable destination for crypto firms to build and grow,” he added.

New York-based Galaxy’s expansion marks a rare bright spot for a market that has struggled to rebound from a collapse in trust since the failure of Sam Bankman-Fried’s FTX exchange last year. Token prices and trading volumes have dropped, and companies across the sector have faced a barrage of US enforcement actions.

Galaxy, which runs crypto trading, lending and asset management businesses, was itself hard hit in the downturn. In the second quarter of last year it recorded a $555mn loss after the firm was hit by the collapse of failed stablecoin terra and its sister crypto token luna.

Many other crypto firms have been aggressively cutting costs over the past year, including Binance, Crypto.com and Gemini.

“We’ve seen a lot of competitors exit the space and that’s offered a unique opportunity for us,” said Marshall, who joined Galaxy in June. He previously worked at crypto broker Genesis, which stopped all trading and lending activity following the collapse of FTX.

Marshall said he was seeking to hire staff across Galaxy’s investment banking, asset management, crypto lending and derivatives businesses.

Venture capital firm Andreessen Horowitz recently picked the UK capital for its first office outside the US, and is focusing on crypto and blockchain investments. Sunak said he was “thrilled” at the move.

Earlier this year, Galaxy partnered with German asset manager DWS to offer investors crypto exchange traded products. “Where Galaxy can compete is by pairing with those institutions and offering our own experience,” Marshall said.