As filed with the Securities and Exchange Commission on January 28, 2022

Registration No. 333-      ​

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Galaxy Digital Inc.*

(Exact Name of Registrant as Specified in Its Charter)

300 Vesey Street
New York, NY 10282
(212) 390-9216

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Galaxy Digital Holdings Ltd.*

(Exact Name of Registrant as Specified in Its Charter)

300 Vesey Street
New York, NY 10282
(212) 390-9216

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Michael Novogratz
Founder and Chief Executive Officer
300 Vesey Street
New York, NY 10282
(212) 390-9216

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies of all communications to:

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and the consummation of the other transactions described herein.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

☐

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Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)

☐

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*

Following the effectiveness of this registration statement and prior to the consummation of the BitGo Acquisition (as defined under “Explanatory Note” and described in this registration statement), Galaxy Digital Holdings Ltd. (“GDHL”) intends, subject to the approval of GDHL shareholders, to effect (i) a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication”) and GDHL will be renamed Galaxy Digital Holdings Inc. (GDHL following the Domestication, “GDH Delaware”), and (ii) certain related corporate reorganization transactions and amendments of applicable governing documents as described in this registration statement (including the amendment, prior to the Domestication, of GDHL’s existing share capital and memorandum and articles of association to authorize and provide for the issuance and terms of up to 500 million Class B ordinary shares of GDHL) (collectively with the Domestication, the “Reorganization”). In the Domestication, all of the issued and outstanding Class A ordinary shares of GDHL will convert, automatically and by operation of law, into an equivalent number of shares of Class A common stock of GDH Delaware and GDH Delaware will, pursuant to its post-Domestication certificate of incorporation, be authorized to issue up to 500 million shares of Class B common stock. Following the Reorganization, GDH Delaware will issue, for nominal consideration, shares of its Class B common stock to the limited partners of Galaxy Digital Holdings LP (“GDH LP”) following such entity’s domestication as a Delaware limited partnership substantially concurrently with the Domestication as described in this registration statement.

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Following the Reorganization and the other transactions described above, GDH Titan Merger Sub 1, Inc. (“Reorganization Merger Sub”), a wholly-owned subsidiary of Galaxy Digital Inc. (formerly known as Galaxy Digital Pubco Inc.) (“Pubco”) that was formed solely for the purpose of consummating the transactions described in this registration statement and that does not have any assets or operations, will merge with and into GDH Delaware, with GDH Delaware continuing as the surviving corporation and a direct wholly-owned subsidiary of Pubco (the “Reorganization Merger”). In the Reorganization Merger, GDH Delaware shareholders will receive shares of Class A common stock and Class B common stock of Pubco in exchange for their shares of Class A common stock and Class B common stock of GDH Delaware, respectively. As a result of the Reorganization and the Reorganization Merger, as described in this registration statement, Pubco will succeed GDHL as the publicly traded company in which existing holders of GDHL ordinary shares will own their equity interests and all securities being registered pursuant to this registration statement will be issued by Pubco as the continuing entity following all such transactions.

As used in this registration statement, unless the context requires otherwise, the term “registrant” refers to (i) GDHL (a Cayman Islands exempted company) prior to the Domestication, (ii) GDH Delaware (a Delaware corporation) immediately following the Domestication but prior to the Reorganization Merger and (iii) Pubco (a Delaware corporation) from and after the Reorganization Merger. It is expected that the Reorganization Merger will be consummated on the day immediately following the consummation of the Domestication.

CALCULATION OF REGISTRATION FEE

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(1)

All securities being registered pursuant to this registration statement will be issued by Pubco, as the registrant following the consummation of the Reorganization and the Reorganization Merger and, where applicable, the BitGo Acquisition (as defined under “Explanatory Note” and described in this registration statement). Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers an indeterminate number of additional shares of Pubco Class A common stock as may be issuable as a result of stock splits, stock dividends or the like.

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(2)

Estimated solely for the purpose of calculating the registration fee for (i) shares of Pubco Class A common stock, based on the U.S. dollar equivalent of the average of the high and low prices for GDHL’s ordinary shares on the Toronto Stock Exchange on January 24, 2022 (such average per share price being $11.76 per share, after converting such average per share price into U.S. dollars at an exchange rate of 1.2656 CAD to 1.00 USD as of January 24, 2022), in accordance with Rule 457(f)(1) under the Securities Act of 1933, as amended, and (ii) the Warrants (as defined below), calculated in accordance with Rule 457(g) under the Securities Act of 1933, as amended.

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(3)

Represents 101,612,044 shares of Pubco Class A common stock estimated to be issued to existing holders of GDHL ordinary shares pursuant to the transactions described in the Management Circular/Prospectus contained in this registration statement, based on the number of GDHL ordinary shares that were issued and outstanding on January 14, 2022.

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(4)

Represents 42,680,995 shares of Pubco Class A common stock estimated to be the maximum number of shares of Pubco Class A common stock that may be issued to holders of BitGo Holdings, Inc. (“BitGo”) capital stock and applicable equity awards in connection with the BitGo Acquisition (as defined under “Explanatory Note” and described in this registration statement) pursuant to the transactions described in the Consent Solicitation Statement/​Prospectus contained in this registration statement and as contemplated by that certain Agreement and Plan of Merger by and among Pubco, GDHL, Galaxy Digital Holdings LP, Reorganization Merger Sub, GDH Titan Merger Sub 2, Inc., BitGo and Fortis Advisors LLC, dated May 5, 2021 (as it may be amended, modified or otherwise supplemented from time to time).

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(5)

Represents warrants to purchase 1,647,556 shares of Pubco Class A common stock (the “Warrants”), based on the total number of warrants to purchase ordinary shares of GDHL outstanding on January 14, 2022, all of which will automatically become warrants to purchase shares of Pubco Class A common stock upon consummation of the transactions described in the Management Circular/Prospectus contained in this registration statement.

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The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus:

1.

a prospectus that will be used as a management information circular (the “Management Circular” or the “Management Circular/Prospectus”) in connection with (i) the solicitation of votes of Galaxy Digital Holdings Ltd. (“GDHL”) shareholders for the special meeting of GDHL shareholders, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association (the “Meeting”), being held to approve (A) GDHL’s deregistration under the Cayman Islands Companies Act (As Revised) and domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication”) and GDHL will be renamed Galaxy Digital Holdings Inc. (GDHL following the Domestication, “GDH Delaware”), and all of the issued and outstanding Class A ordinary shares of GDHL will convert, automatically and by operation of law and without cancellation or redemption, into an equivalent number of shares of Class A common stock of GDH Delaware, and (B) certain related corporate reorganization transactions and amendments of applicable governing documents as described in this registration statement (including the amendment, prior to the Domestication, of GDHL’s existing share capital and memorandum and articles of association to authorize and provide for the issuance and terms of up to 500 million Class B ordinary shares of GDHL) (collectively with the Domestication, the “Reorganization”), (ii) the registration of shares of Class A common stock of Galaxy Digital Inc. (formerly known as Galaxy Digital Pubco Inc.) (“Pubco”) to be issued to holders of GDH Delaware Class A common stock (i.e., the holders of GDHL ordinary shares prior to the Reorganization) upon consummation of the merger of GDH Titan Merger Sub 1, Inc. (“Reorganization Merger Sub”) with and into GDH Delaware, with GDH Delaware continuing as the surviving corporation and a direct wholly-owned subsidiary of Pubco (the “Reorganization Merger”) and shareholders of GDH Delaware receiving shares of Class A common stock and Class B common stock of Pubco in exchange for their shares of Class A common stock and Class B common stock of GDH Delaware, respectively, and (iii) the registration of warrants to purchase shares of Class A common stock of Pubco (the “Warrants”), into which the currently outstanding warrants to purchase ordinary shares of GDHL will convert, automatically and by operation of law, upon consummation of the Reorganization and Reorganization Merger; and

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2.

a prospectus that will be used as a consent solicitation statement (the “Consent Solicitation Statement/Prospectus”) in connection with (i) the solicitation of votes of BitGo Holdings, Inc. (“BitGo”) stockholders to approve the Agreement and Plan of Merger, dated May 5, 2021, by and among GDHL, Galaxy Digital Holdings LP (“GDH LP”), Pubco, Reorganization Merger Sub, GDH Titan Merger Sub 2, Inc. (“Merger Sub 2”), BitGo and Fortis Advisors LLC in its capacity as the representative of the equityholders thereunder (as it may be amended, modified or otherwise supplemented from time to time, the “Merger Agreement”) and the transactions contemplated thereby, including the merger of Merger Sub 2 with and into BitGo, with BitGo continuing as the surviving corporation and ultimately an indirect wholly-owned subsidiary of GDH LP and a consolidated subsidiary of Pubco and BitGo stockholders receiving cash and shares of Class A common stock of Pubco in exchange for their shares of capital stock and applicable equity awards of BitGo as contemplated by the Merger Agreement (the “BitGo Acquisition”) and (ii) the registration of shares of Class A common stock of Pubco to be issued to BitGo stockholders and equity award holders upon consummation of the BitGo Acquisition pursuant to the Merger Agreement.

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The Management Circular/Prospectus and the Consent Solicitation Statement/Prospectus are identical in all respects, except that:

•

the front cover page of each prospectus is different;

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•

the Notice of Special Meeting of Galaxy Digital Holdings Ltd. Shareholders appears only in the Management Circular/Prospectus;

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•

the sections entitled “About This Prospectus” and “Where You Can Find More Information” within each prospectus are different;

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•

the sections entitled “The Special Meeting of GDHL Shareholders,” “Certain Canadian Federal Income Tax Considerations,” “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants,” “Appraisal and Dissenters’ Rights of GDHL Shareholders” and “Additional Management Circular Matters under Canadian Securities Laws (NI 51-102F5),” as well as any similarly-titled subsections within the section entitled “Prospectus Summary,” appear only in the Management Circular/Prospectus;

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•

the sections entitled “The Proposed Transactions—The Second Merger and the BitGo
Acquisition—BitGo’s Background To the BitGo Acquisition,” “The Proposed Transactions—The Second Merger and the BitGo Acquisition—BitGo’s Reasons For the BitGo Acquisition; Recommendation of the BitGo Board,” “Solicitation of Consent of BitGo Stockholders,” “Certain U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Consequences of the Second Merger to BitGo Stockholders,” “Interests of BitGo’s Directors and Officers in the BitGo Acquisition” and “Appraisal and Dissenters’ Rights of BitGo Stockholders,” as well as any similarly-titled subsections within the section entitled “Prospectus Summary,” appear only in the Consent Solicitation Statement/Prospectus; and

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•

the section entitled “Glossary—Other Terms Used in this Prospectus,” as well as the table of contents and the page numbers of each prospectus, will be different as a result of the differences outlined above.

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The alternate pages for the Consent Solicitation Statement/Prospectus are marked as “Alternate Pages for Consent Solicitation Statement/Prospectus” within Annex CSS to this Registration Statement and appear after the last page of the Management Circular/Prospectus.

 

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. We may not distribute or issue the securities being registered pursuant to this registration statement until the registration statement (of which this preliminary Management Circular/Prospectus is a part), as filed with the Securities and Exchange Commission, is effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This preliminary Management Circular/Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.​

PRELIMINARY MANAGEMENT CIRCULAR/PROSPECTUS
SUBJECT TO COMPLETION, DATED JANUARY 28, 2022

MANAGEMENT INFORMATION CIRCULAR OF GALAXY DIGITAL HOLDINGS LTD.
AND PROSPECTUS OF GALAXY DIGITAL INC.

These materials are important and require your immediate attention. They require the shareholders of Galaxy Digital Holdings Ltd. to make important decisions. If you are a Galaxy Digital Holdings Ltd. shareholder and are in doubt as to how to make such decisions, please contact your financial, legal, tax and other professional advisors. If you require further assistance, please do not hesitate to contact Galaxy Digital Holdings Ltd.’s strategic shareholder advisor and proxy solicitation agent, D.F. King Canada, by email at inquiries@dfking.com, by telephone at 1 (800) 835-0437 (toll free within Canada and the United States) or direct at 1 (416) 682-3825 (banks, brokers and collect calls outside Canada and the United States).

PROPOSED REORGANIZATION—YOUR VOTE IS VERY IMPORTANT

To the Shareholders of Galaxy Digital Holdings Ltd.:

This management information circular (the “Management Circular”) is furnished in connection with the solicitation of proxies by the management of Galaxy Digital Holdings Ltd. (“GDHL”) for use at the special meeting, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association (the “Meeting”), of the holders of ordinary shares of GDHL (each, a “Shareholder” or a “GDHL shareholder”) to be held in person on [•], 2022 at [•] (local time) at [•] and virtually via live webcast at [•] for the purposes set forth below and in the accompanying Notice of Meeting (the “Notice”).

On May 5, 2021, GDHL announced that, subject to the approval of GDHL shareholders, GDHL expects to effect a reorganization and domestication (the “Reorganization”) of GDHL on the terms described herein. In summary, under the proposed terms of the Reorganization, among other things:

•

GDHL and Galaxy Digital Holdings LP (“GDH LP”) will redomicile from the Cayman Islands to the State of Delaware.

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•

GDHL and its affiliated entities’ corporate and capital structure will be reorganized so as to normalize it on the basis of frequently used “Up-C structures” in the United States, with the Reorganization including the following steps:

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•

Galaxy Digital Inc. (formerly known as Galaxy Digital Pubco Inc.) (“Pubco”), a new Delaware-incorporated holding company, will become the successor public company of GDHL, with all outstanding Ordinary Shares (as defined below) being ultimately converted into and exchanged for shares of Class A Common Stock of Pubco.

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•

The existing organizational documents of GDH LP will be amended and restated, including to provide that Michael Novogratz, the Chief Executive Officer and Founder of GDHL, who currently controls the general partnership interests of GDH LP, will transfer control of the general partnership interests of GDH LP to Pubco. However, notwithstanding such transfer of control of the general partnership interests of GDH LP to Pubco, Michael Novogratz will continue to ultimately effectively control the business of GDH LP by virtue of his ownership of the new voting securities of Pubco that will be issued to entities controlled by him, as described below (i.e., Michael Novogratz will have the same control over GDH LP he has now, but through his control of Pubco rather than directly through the general partnership interests of GDH LP).

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•

Pubco will issue new voting securities to entities controlled by Michael Novogratz and other holders of Class B Units (as defined below) of GDH LP (such holders collectively, the “Existing LPs”) that will entitle them to vote (but not hold any economic rights) at the Pubco level, as though they had converted their existing Class B Units of GDH LP to shares of Class A Common Stock of Pubco. The holder of each such voting security of Pubco will also hold a LP Unit (as defined below) of GDH LP that will entitle its holder to economic rights in GDH LP and that cannot be transferred without a concurrent transfer of such a voting security of Pubco. As a result of such issuance, Michael Novogratz is expected to own approximately 62.3% of Pubco’s voting power immediately following the Reorganization and the Reorganization Merger.

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•

Pubco will enter into, and agree to certain payment rights and obligations pursuant to, an amendment and restatement of the existing tax receivable agreement between GDHL, GDH LP and certain other parties thereto.

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•

The “variable voting rights” attached to the Ordinary Shares that currently restrict the aggregate votes that may be cast by U.S. shareholders will be eliminated.

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•

Pubco intends to apply to list its Class A Common Stock on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “GLXY”.

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•

In order to comply with applicable money transmitter laws in the United States, the Proposed Organizational Documents (as defined below) will provide that Pubco’s board of directors may take certain actions, including (i) preventing the transfer of capital stock, (ii) redeeming capital stock at par value or (iii) restricting the exercise of rights with respect to capital stock, in certain circumstances in which a stockholder of Pubco would potentially hold more than 9.9% of the total issued and outstanding shares of Pubco on a fully diluted basis.

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More specifically, GDHL expects to (i) deregister under the Cayman Islands Companies Act (As Revised) and domesticate under Section 388 of the Delaware General Corporation Law, pursuant to which the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication”) and GDHL will be

renamed Galaxy Digital Holdings Inc. (GDHL following the Domestication, “GDH Delaware”), and (ii) consummate certain related corporate reorganization transactions, including the amendment, prior to the Domestication, of GDHL’s existing share capital and memorandum and articles of association, a copy of which is attached to this Management Circular as Annex “A” ​(the “Existing Organizational Documents”) to authorize and provide for the issuance and terms of up to 500 million Class B ordinary shares of GDHL (the “Governing Documents Amendment”), all as described in this Management Circular. In the Domestication, all of the issued and outstanding Class A ordinary shares of GDHL (the “Ordinary Shares”) will convert, automatically and by operation of law and without redemption or cancellation, on a one-for-one basis into an equivalent number of shares of Class A Common Stock of GDH Delaware and GDH Delaware will, pursuant to its post-Domestication certificate of incorporation, be authorized to issue up to 500 million shares of Class B common stock.

In connection with the Domestication, GDHL shareholders are also being asked to consider and vote upon an amendment and restatement of the memorandum and articles of association of GDHL (as amended by the Governing Documents Amendment) by their deletion in their entirety and the substitution in their place of the proposed new certificate of incorporation, substantially in the form attached to this Management Circular as Annex “B”, and the proposed new bylaws, substantially in the form attached to this Management Circular as Annex “C” ​(such proposed certificate of incorporation and proposed bylaws, the “Proposed Organizational Documents,” and such amendment and restatement, the “Domestication Charter and Bylaws Amendment”). The Proposed Organizational Documents will be in effect as the governing documents of GDH Delaware upon the completion of the Domestication and will provide for two classes of common stock of GDH Delaware, Class A Common Stock and Class B Common Stock. Shareholders are also being asked to approve certain material differences between the Existing Organizational Documents and the Proposed Organizational Documents (the “Domestication Charter and Bylaws Differences”).

Furthermore, GDHL shareholders, excluding persons required to be excluded for the purpose of such vote (the “Excluded Shareholders”) under Multilateral Instrument 61-101—Protection of Minority Securityholders in Special Transactions (“MI 61-101”), are being asked to consider and vote upon the issuance, following the Domestication but prior to the Reorganization Merger (as described below), of a number of shares of Class B Common Stock of GDH Delaware (which shares of Class B Common Stock of GDH Delaware will convert, automatically and by operation of law, into shares of Class B Common Stock of Pubco in the Reorganization Merger) to each Existing LP of GDH LP equal to the number of Class B limited partnership units (the “Class B Units”) of GDH LP held by each such Existing LP immediately following the Domestication (the “Issuance of Class B Common Stock”).

The Domestication, the Governing Documents Amendment, the Domestication Charter and Bylaws Amendment, the Domestication Charter and Bylaws Differences and the Issuance of Class B Common Stock are collectively referred to in this Management Circular as the “Reorganization”.

Finally, GDHL shareholders are being asked to consider and vote upon the technical proposal to allow the chairman to adjourn the Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the proposals relating to Reorganization (the “Adjournment”).

Assuming the Reorganization is approved by Shareholders, the Reorganization will be effectuated prior to the consummation of the Reorganization Merger, which is not required to be submitted to a vote of GDHL or GDH Delaware shareholders.

In the Reorganization Merger, Reorganization Merger Sub (as defined in this Management Circular), a wholly-owned direct subsidiary of Pubco, which was incorporated as a Delaware corporation for the purpose of consummating the Reorganization Merger described in this Management Circular and which does not have any assets or operations, will merge with and into GDH Delaware, with GDH Delaware continuing as the surviving corporation and as a direct wholly-owned subsidiary of Pubco (the “Reorganization Merger”). In connection with the Reorganization Merger, (i) each share of Class A Common Stock and Class B Common Stock of GDH Delaware will convert, automatically and by operation of law, on a one-for-one basis into one share of Class A Common Stock and Class B Common Stock of Pubco, respectively, and (ii) the certificate of incorporation and bylaws of Pubco will be amended and restated to be substantively identical to the Proposed Organizational Documents (and the term “Proposed Organizational Documents” shall refer, following the Reorganization Merger, to the certificate of incorporation and bylaws of Pubco as so amended). Each share of Class A Common Stock and Class B Common Stock of Pubco will entitle its holder to one vote per share on all matters submitted to a vote of holders of Pubco Common Stock.

Following the Reorganization and the Reorganization Merger, Pubco will be a holding company that will succeed GDHL as the publicly traded company in which existing Shareholders will own their equity interests in our business. All of our activities are, and will be, conducted through GDH LP and its subsidiaries, and Pubco’s principal assets will be its (i) direct and indirect ownership of certain limited partnership interests of GDH LP, which will entitle it to a corresponding percentage ownership of the economic interest in our business, and (ii) ownership of 100% of the equity interests of GDH Delaware, which will be the sole general partner of GDH LP, which will entitle Pubco to control all actions of GDH LP and thereby control our business.

While the Reorganization is intended to normalize GDHL’s corporate and capital structure and align all stakeholders’ interests, the Issuance of Class B Common Stock is a “related party transaction” pursuant to MI 61- 101. Accordingly, GDHL’s board of directors (the “Board”) formed a special committee of independent directors comprised of all the directors of GDHL, other than Michael Novogratz (the “Special Committee”), to consider the Reorganization.

Your vote is very important. Whether or not you plan to attend the Meeting, please take appropriate action to make sure your Ordinary Shares are represented at the Meeting.

After careful consideration of, among other things, the unanimous recommendation of the Special Committee, the Board has determined (with the interested directors declaring their interest and abstaining on voting with respect to the resolutions related to the Reorganization) that the Reorganization is (i) fair to GDHL shareholders, other than Excluded Shareholders, and (ii) in the best interest of GDHL, and recommends that you vote or give instruction to vote “FOR” the approval of the Reorganization.

This Management Circular provides you with detailed information about the Reorganization and the Adjournment to be considered at the Meeting. We urge you to read this Management Circular carefully. In particular, you should review the matters discussed in the section entitled “Risk Factors” in this Management Circular.

This Management Circular is also a prospectus under U.S. securities laws which: (i) covers the registration under the U.S. Securities Act of 1933, as amended, of the issuance of 101,612,044 shares of Class A Common Stock of Pubco that will ultimately be held by GDHL Shareholders upon consummation of the Reorganization (and immediately following the Reorganization Merger); (ii) relates to the issuance by Pubco of warrants to purchase shares of Class A Common Stock of Pubco (the “Warrants”), into which the outstanding warrants to purchase Ordinary Shares will convert by operation of law upon consummation of the Reorganization and the Reorganization Merger (each Warrant will entitle the holder thereof to receive one share of Pubco Class A Common Stock at an exercise price equal to the USD equivalent of C$8.25 per share, exercisable on or prior to November 12, 2022, and in each case subject to adjustment in accordance with the warrant instrument governing the Warrants.)

No securities regulatory authority or similar authority in Canada, nor the U.S. Securities and Exchange Commission or any state security commission, has approved or disapproved of the Class A Common Stock or the transactions described in this Management Circular, passed upon the merits or fairness of such transactions contemplated, or passed upon the adequacy or accuracy of this Management Circular.

We appreciate your continued interest in our company.

Dated as of the [•] day of [•], 2022.

“Michael Novogratz”
MICHAEL NOVOGRATZ
Founder and Chief Executive Officer

 

NOTICE OF SPECIAL MEETING OF GALAXY DIGITAL HOLDINGS LTD. SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the special meeting, which shall constitute an extraordinary general meeting for purposes of Galaxy Digital Holdings Ltd.’s (“GDHL”) memorandum and articles of association, on [•], 2022 at [•] (local time) at [•] and virtually via live webcast at [•] (the “Meeting”) of the holders of ordinary shares (the “Shareholders” or the “GDHL shareholders”) of GDHL for the purpose of considering and, if deemed advisable, voting to approve the following resolutions:

1.

a special resolution to approve a reorganization of GDHL comprised of:

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a.

GDHL’s deregistration under the Cayman Islands Companies Act (As Revised) and domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication” and such proposal “Domestication Proposal”) and GDHL will be renamed Galaxy Digital Holdings Inc. (GDHL following the Domestication, “GDH Delaware”);

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b.

the amendment, prior to the Domestication, of GDHL’s existing share capital and memorandum and articles of association to authorize and provide for the issuance and terms of up to 500 million Class B ordinary shares of GDHL (the “Governing Documents Amendment” and such proposal the “Governing Documents Amendment Proposal”);

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c.

upon the consummation of the Domestication, the amendment and restatement of the memorandum and articles of association of GDHL (as amended upon the approval of the Governing Documents Amendment Proposal) (the “Existing Organizational Documents”) by their deletion in their entirety and the substitution in their place of the proposed new certificate of incorporation, substantially in the form attached to the accompanying management information circular (the “Management Circular”) as Annex “B”, and the proposed new bylaws, substantially in the form attached to the accompanying Management Circular as Annex “C” ​(the “Domestication Charter and Bylaws Amendment,” and such proposed certificate of incorporation and proposed bylaws, the “Proposed Organizational Documents” and such proposal, the “Proposed Organizational Documents Proposal”); and

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d.

four separate proposals with respect to certain material differences between the Existing Organizational Documents and the Proposed Organizational Documents (collectively, the “Domestication Charter and Bylaws Differences Proposals”);

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2.

assuming the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal and the Domestication Charter and Bylaws Differences Proposals are approved, a resolution to approve, by a simple majority, excluding persons required to be excluded for the purpose of such vote (the “Excluded Shareholders”) under Multilateral Instrument 61-101—Protection of Minority Securityholders in Special Transactions (“MI 61-101”), the issuance of a number of shares of GDH Delaware Class B Common Stock to each existing Class B limited partner (collectively, the “Existing LPs”) of Galaxy Digital Holdings LP (“GDH LP”) equal to the number of limited partnership units of GDH LP held by each such Existing LP immediately following the Domestication (the “Issuance of Class B Common Stock” and such proposal the “Issuance of Class B Common Stock Proposal”); and

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3.

an ordinary resolution to approve the technical proposal to allow the chairman to adjourn the Meeting (the “Adjournment”) to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal, the Domestication Charter and Bylaws Differences Proposals and the Issuance of Class B Common Stock Proposal (such proposal, the “Adjournment Proposal” and together with the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal, each of the Domestication Charter and Bylaws Differences Proposals and the Issuance of Class B Common Stock Proposal, the “Proposals”).

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Each of the Proposals is more fully described in the accompanying Management Circular, which we urge each GDHL shareholder to review carefully. The full text of the resolutions approving the Proposals is attached to this Management Circular as Appendix “1”.

The Domestication, the Governing Documents Amendment, the Domestication Charter and Bylaws Amendment, the Domestication Charter and Bylaws Differences and the Issuance of Class B Common Stock are collectively referred to in this Management Circular as the “Reorganization”.

Each of the Proposals that must be approved by special resolution must be approved, as a matter of Cayman Islands law, by the affirmative vote of not less than two-thirds of the Shareholders present in person or virtually or represented by proxy and entitled to vote at the Meeting. Each of the Proposals that must be approved by ordinary resolution must be approved, as a matter of Cayman Islands law, by the affirmative vote of a majority of the Shareholders present in person or virtually or represented by proxy and entitled to vote at the Meeting. While the Issuance of Class B Common Stock Proposal is conditional on the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal and the Domestication Charter and Bylaws Differences Proposal, collectively, the Adjournment Proposal is not conditional on the approval of any other Proposal.

Only GDHL’s registered Shareholders at the close of business on [•], 2022 will be entitled to receive notice of, and to vote at, the Meeting or any adjournment thereof. Shareholders who are unable to or who do not wish to attend the Meeting are requested to date and sign the enclosed form of proxy promptly and return it in the self-addressed envelope enclosed for that purpose or by any of the other methods indicated in the form of proxy. To be effective, a properly executed proxy must be received by mail or delivered by hand to GDHL’s transfer agent, TSX Trust Company. In order to be valid and acted upon at the Meeting, a properly executed form of proxy must be received by [•] p.m. (local time) on [•], 2022, or in the event the Meeting is adjourned or postponed, not later than [•] (local time) on the day which is two business days preceding the date of the adjourned or postponed Meeting. The time limit for the deposit of proxies may be waived by GDHL’s board of directors (the “Board”) at its discretion and without notice, but the Board is under no obligation to do so. GDHL’s beneficial Shareholders must complete and return the voting instruction form provided to them by their intermediary (such as a broker, custodian, trustee or nominee) and return it in accordance with the instructions accompanying such voting instruction form.

We are providing the accompanying Management Circular to Shareholders in connection with the solicitation of proxies to be voted at the Meeting and at any adjournment of the Meeting.

Whether or not you plan to attend the Meeting, we urge you to read the accompanying Management Circular carefully.

The Board formed a special committee of independent directors comprised of all the directors of GDHL, other than Michael Novogratz (the “Special Committee”), to consider the Reorganization. The Special Committee retained independent counsel and an independent financial advisor.

After careful consideration of, among other things, the unanimous recommendation of the Special Committee, the Board has determined (with the interested directors declaring their interest and abstaining on voting with respect to the resolutions related to the Reorganization) that the Reorganization is (i) fair to Shareholders, other than Excluded Shareholders, and (ii) in the best interest of GDHL, and recommends that you vote or give instruction to vote “FOR” the approval of the Reorganization.

If you have any questions or need assistance voting your shares, please contact GDHL’s strategic shareholder advisor and proxy solicitation agent, D.F. King Canada, by email at inquiries@dfking.com, by telephone at 1 (800) 835-0437 (toll free within Canada and the United States) or direct at 1 (416) 682-3825 (banks, brokers and collect calls outside Canada and the United States).

Dated as of the [•] day of [•], 2022.

BY ORDER OF THE BOARD

“Michael Novogratz”

MICHAEL NOVOGRATZ

Founder and Chief Executive Officer

 

 

TABLE OF CONTENTS

 

 

ANNEXES

 

 

ABOUT THIS PROSPECTUS

This Management Circular/Prospectus (this “prospectus”) forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) (File No. 333-[•]) by Galaxy Digital Holdings Ltd. (“GDHL”) and Galaxy Digital Inc. (“Pubco”), and relates to the shares of Class A common stock of Pubco to be issued to GDHL shareholders upon consummation of the Domestication and the Reorganization Merger (each as defined and described in further detail in this prospectus). It also constitutes a notice of meeting with respect to the special meeting of GDHL shareholders, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association, described in this prospectus. Pubco and GDHL have not authorized anyone to provide you with any information other than the information that is contained in this prospectus. Pubco and GDHL take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is dated as of [•], 2022. You should not assume that the information contained in this prospectus is accurate as of any date other than such date. Neither the mailing of this prospectus to GDHL shareholders, nor the issuance by Pubco of shares of its Class A common stock in connection with the Reorganization Merger as described in this prospectus, will create any implication to the contrary. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this prospectus regarding GDHL, Galaxy Digital Holdings LP (“GDH LP”) and Pubco (such entities collectively, “Galaxy”) has been provided by Galaxy, and information contained in this prospectus regarding BitGo Holdings, Inc. (“BitGo”) has been provided by BitGo.

BASIS OF FINANCIAL STATEMENT PRESENTATION

Galaxy’s business is operated through GDH LP and its subsidiaries. Prior to the consummation of the Reorganization and the Reorganization Merger (as defined below and described in further detail in this prospectus) and Galaxy’s acquisition of BitGo (such acquisition, the “BitGo Acquisition”), GDHL, the ordinary shares of which are listed on the Toronto Stock Exchange, held a minority economic interest in GDH LP via its ownership of Class A Units of GDH LP, accounted for as an equity method investment. Following the effectiveness of the registration statement of which this prospectus forms a part, GDHL intends, subject to the approval of GDHL shareholders, to effect (i) a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication”) and GDHL will be renamed Galaxy Digital Holdings Inc. (GDHL following the Domestication, “GDH Delaware”), and (ii) certain related corporate reorganization transactions and amendments of applicable governing documents as described in this prospectus (collectively with the Domestication, the “Reorganization”). Following the Reorganization, a wholly-owned subsidiary of Pubco that was formed solely for the purpose of consummating the transactions described in this prospectus and that does not have any assets or operations will merge with and into GDH Delaware, with GDH Delaware continuing as the surviving corporation and a direct wholly-owned subsidiary of Pubco (the “Reorganization Merger”). Pubco, which was incorporated as a Delaware corporation primarily for the purpose of consummating the Reorganization and facilitating the BitGo Acquisition and which does not currently have any assets or operations, will be the issuer of the shares of Class A Common Stock that are the subject of the registration statement on Form S-4 of which this prospectus forms a part.

Following the consummation of the Reorganization and the Reorganization Merger, Pubco will be a U.S. reporting issuer subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) and will succeed to GDHL’s existing reporting obligations in Canada. Pubco will be a holding company, and GDH LP will be the predecessor of Pubco for financial reporting purposes, in what is commonly referred to as an umbrella partnership corporation (“Up-C”) structure. Pubco’s principal assets will be (1) its ownership, directly and indirectly, of LP Units (as defined and described in further detail in this prospectus) of GDH LP, which will entitle it to a corresponding percentage ownership of the economic interest in GDH LP, and (2) its ownership of 100% of the outstanding equity interests in GDH Delaware which will be the sole general partner of GDH LP. Through its ownership of GDH Delaware, Pubco will operate and control all of the business and affairs of GDH LP, and, through GDH LP and its subsidiaries,

 

i

 

will conduct all of Galaxy’s business, which, following the consummation of the BitGo Acquisition, will include BitGo’s business. As a result, Pubco will consolidate GDH LP on its consolidated financial statements and record a noncontrolling interest related to the LP Units held by the Existing LPs (as defined and described in further detail in this prospectus) on its consolidated statement of financial position and consolidated statement of operations. See the section entitled “Proposed Organizational Structure” in this prospectus.

Accordingly, the registration statement of which this prospectus forms a part includes the audited annual financial statements of GDH LP, as the accounting predecessor to Pubco, for all financial statement periods presented within the registration statement of which this prospectus forms a part and amendments thereto. Galaxy has not included any financial statements or other historical financial information of GDHL in this prospectus, as it was not identified as a predecessor to Pubco and its financial statements do not provide prospective Pubco stockholders or investors with any meaningful information about the Galaxy business that cannot be discerned from GDH LP’s financial statements. Specifically, the financial information of GDHL primarily reflects its equity method investment in GDH LP, which entity’s financial statements are already included within the registration statement as a consolidated subsidiary of Pubco after giving effect to the Reorganization and the Reorganization Merger.

The registration statement of which this prospectus forms a part does not include the audited statement of financial position of Pubco as of its date of initial capitalization. As discussed in the section entitled “Proposed Organizational Structure” in this prospectus, Pubco is a newly-incorporated “business combination related shell company” as such term is defined in Rule 405 of the Securities Act, with nominal assets and operations which was formed primarily for the purpose of consummating the Reorganization and the Reorganization Merger and facilitating the BitGo Acquisition, and therefore its financial statements are not required to be included in the registration statement of which this prospectus forms a part.

In addition, immediately following the consummation of the Reorganization and the Reorganization Merger, Pubco intends to consummate the BitGo Acquisition, pursuant to which BitGo will become a wholly-owned indirect subsidiary of Pubco. In the registration statement of which this prospectus forms a part, Galaxy has included the historical financial statements of BitGo as of and for each of the years ended December 31, 2020, 2019 and 2018 and, as of and for the nine months ended September 30, 2021, in each case prepared in accordance with generally accepted accounting principles in the United States (‘‘GAAP’’ or ‘‘U.S. GAAP’’).

In this prospectus, unless otherwise stated or the context otherwise requires, the “Company,” “we,” “our,” “us,” “Galaxy Digital,” “Galaxy” and similar references refer (1) prior to the consummation of the Reorganization and the Reorganization Merger, to GDH LP and its consolidated subsidiaries, and (2) subsequent to the consummation of the Reorganization and the Reorganization Merger, to Pubco and its consolidated subsidiaries (including GDH LP and its consolidated subsidiaries).

In this prospectus, all references to “$” and “USD” mean U.S. Dollars and all references to “C$” and “CAD” mean Canadian Dollars. Any conversion from U.S. Dollars to Canadian Dollars (or vice versa) has been determined by converting such currencies at the foreign exchange rate published by the Bank of Canada as of the date indicated.

NON-GAAP FINANCIAL MEASURES

In this prospectus, we present certain supplemental financial measures that are not prepared in accordance with GAAP. These non-GAAP financial measures are unaudited, are presented as supplemental disclosure and should not be considered in isolation of, as a substitute for or superior to our financial information prepared in accordance with GAAP, and should be read in conjunction with the financial statements included elsewhere in this prospectus. The non-GAAP financial measures used in this prospectus include net digital assets, net digital assets at fair value and adjusted net income. For additional information on why we present our non-GAAP financial measures, the limitations associated with using our non-GAAP financial measures and reconciliations of each of our non-GAAP financial measures to the most comparable applicable GAAP measure, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Galaxy—Non-GAAP Financial Measures” in this prospectus.

 

ii

 

INDUSTRY AND MARKET DATA

This prospectus includes industry and market data that Galaxy obtained from periodic industry publications, third-party studies and surveys, as well as from filings of public companies in Galaxy’s industry and internal company surveys. These sources include government and industry sources. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although Galaxy believes the industry and market data to be reliable as of the date of this prospectus, this information could prove to be inaccurate. Industry and market data could be inaccurate because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Nonetheless, Galaxy is liable for the information included in this prospectus. None of the publications, reports or other published industry sources referred to in this prospectus were commissioned by Galaxy or prepared at Galaxy’s request, and as such, Galaxy has not sought or obtained the consent of any of these sources to include such market data in this prospectus.

PRESENTATION OF SHARE CAPITAL

Unless otherwise indicated or the context otherwise requires, in this prospectus the number of ordinary shares of GDHL and limited partnership units of GDH LP outstanding, and the number of shares of Pubco Class A common Stock and Class B common stock to be outstanding following consummation of the Reorganization and the Reorganization Merger, is based on GDHL’s and GDH LP’s securities outstanding as of January 14, 2022, and excludes:

•

1,647,556 ordinary shares of GDHL (or shares of Pubco Class A common stock) issuable upon exercise of the Warrants outstanding as of such date;

​

•

48,290,478 ordinary shares of GDHL (or shares of Pubco Class A common stock) reserved for issuance under our equity compensation plans as of such date;

​

•

8,671,079 ordinary shares of GDHL (or shares of Pubco Class A common stock) issuable upon the exercise of options to acquire such shares that are vested and outstanding as of such date;

​

•

30,381,795 ordinary shares of GDHL (or shares of Pubco Class A common stock) reserved for issuance upon vesting and exercise of outstanding options granted pursuant to our equity compensation plans or otherwise;

​

•

7,833,659 ordinary shares of GDHL (or shares of Pubco Class A common stock) in respect of unvested restricted share units granted pursuant our equity compensation plans; and

​

•

21,274,971 ordinary shares of GDHL (or shares of Pubco Class A common stock) issuable upon exchange of the Exchangeable Notes (as defined herein) outstanding as of such date (which is the maximum number of shares issuable upon the exchange of the Exchangeable Notes, assuming that all such exchanges are settled by delivery of shares, and subject to certain adjustments).

​

In addition, (i) unless otherwise indicated as giving effect to the BitGo Acquisition, or the context otherwise requires, the number of shares of Pubco Class A common Stock to be outstanding following consummation of the Reorganization and the Reorganization Merger excludes 33,800,000 shares of Pubco Class A common stock that may be issued to holders of BitGo capital stock and applicable equity awards in connection with the BitGo Acquisition pursuant to the Merger Agreement and (ii) references to, and calculations involving or based, in whole or in part, on the number of shares of Pubco Class A Common Stock to be issued in the BitGo Acquisition (including references to or calculations of the number of shares of Pubco Class A common stock to be outstanding following the consummation of the BitGo Acquisition) exclude up to 8,880,995 shares of Pubco Class A common stock that may be issued in exchange for proceeds of BitGo’s digital assets that are to be liquidated prior to the closing of the Second Merger in accordance with the Merger Agreement, if any (valued at $28.15 per share). See the sections entitled “Description of Pubco Capital Stock,” “Shares Eligible for Future Sale” and “The Merger Agreement—Consideration in the Second Merger; Effect of the Second Merger on BitGo’s Capital Stock” in this prospectus.

 

iii

 

WHERE YOU CAN FIND MORE INFORMATION

Pubco and GDHL have filed with the SEC a registration statement on Form S-4 (the “Registration Statement”) under the Securities Act with respect to the transactions described herein. This prospectus, which constitutes part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto. For further information about Galaxy and such transactions, Galaxy refers you to the Registration Statement and the exhibits and schedules filed as a part of the Registration Statement. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete. If a contract or document has been filed as an exhibit to the Registration Statement, Galaxy refers you to the copy of the contract or document that has been filed as an exhibit to the Registration Statement, and each statement about such contract or document is qualified in all respects by such reference.

As a result of the Reorganization and the Reorganization Merger, Pubco will become a U.S. reporting issuer subject to Section 13 or 15(d) of the Exchange Act and will be required to file periodic reports and other information with the SEC. The SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like Pubco, that file such reports, proxy statements and other information electronically with the SEC. The address of that website is www.sec.gov. Following the consummation of the Reorganization and the Reorganization Merger, you can also obtain these documents, free of charge, from Galaxy’s website at www.galaxydigital.io. The information contained on, or that may be accessed through, Galaxy’s website is not incorporated by reference into, and is not a part of, this prospectus, and Pubco’s reports and any other information that Pubco has filed or may in the future file with the SEC are not incorporated by reference into, and do not constitute a part of, this prospectus or the Registration Statement.

GDHL also files annual, quarterly and material change reports, management circulars and other business and financial information with the applicable members of the Canadian Securities Administrators on the System for Electronic Document Analysis and Retrieval (“SEDAR”). Such information is available under GDHL’s profile on SEDAR at www.sedar.com. The information contained on, or that may be accessed through, SEDAR is not incorporated by reference into, and is not a part of, this prospectus. Following the consummation of the Reorganization and the Reorganization Merger, Pubco will succeed to GDHL’s existing reporting obligations in Canada.

In addition, you may obtain copies of the information and any such documents filed as an exhibit to the Registration Statement for no charge by writing or telephoning Galaxy at the following address or telephone number:

Galaxy Digital Inc.
300 Vesey Street
New York, NY 10282
Attn.: Secretary
(212) 390-9216

If you would like to request any documents, please do so by [•], 2022 in order to receive them before the special meeting of GDHL shareholders described in this prospectus, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association.

 

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A Letter from Michael Novogratz, our Founder and Chief Executive Officer

Dear Shareholders,

I founded Galaxy in 2018 to bring institutions into a movement that I believe is a revolution. My own journey in crypto started in 2013. In the shadow of the global financial crisis, I saw Bitcoin—a decentralized digital currency with a fixed supply—simply a compelling asset: a store of value and a hedge against the debasement of fiat currency. I invested and returned to my day job as a Macro trader.

I often described my work as a trader as looking for patterns that might foreshadow the future shape of the world. But I didn’t realize that the most important technological innovation in decades was sitting quietly at the bottom of my personal balance sheet. It was only in a Brooklyn warehouse in early 2016 that I began to see the outlines of the bigger picture. My college roommate had co-founded a project called Ethereum. I expected to find an office, an assistant, and a dog. Instead, I found thirty young people who believed with unshakeable confidence that they were going to change the world.

The Blockchain Revolution

The volatility of the cryptocurrency market makes for good headlines. But to focus only on price movements or speculation is to overlook the authentic revolutionary zeal in our industry; the people working every day to make the world’s digital, financial, and consumer infrastructure more transparent and egalitarian. This community is what made me passionate about crypto.

That young people are at the heart of this movement is unsurprising. Blockchain technology and crypto networks are a direct response to a breakdown of trust in centralized authority and to the failure of past generations as global stewards. It is in the context of rising inequality, stagnant real wage growth, and declining opportunities for upward mobility that younger generations have sought to forge their own path.

The genius of the Bitcoin whitepaper was to combine a digital signature which could not be counterfeited with a protocol—a ruleset—to achieve global agreement on digital information. Currency was only the first application. This innovation opened the door to true digital ownership and gave us a better way of organizing the economic world.

A New Paradigm

The world is now undergoing simultaneous and interconnected secular shifts: the first from analog to digital assets, and the second from an economy of participation to an economy of ownership within the new digital paradigm. Bitcoin created the possibility of a truly global, digitally connected financial system. The accelerating institutional adoption of Bitcoin and other cryptocurrencies shows that digital assets are here to stay. But the changes we are living through represent more than the emergence of a new asset class. People today use cryptocurrencies to make payments, lend, send remittances, earn interest, and borrow money—with greater speed, flexibility, and security.

More broadly, a peer-to-peer network that does not require an intermediary to ensure trust, combined with improvements in smart contracts, enable ownership economies in the digital world. This “internet of value,” sometimes called Web 3.0, is the next step towards the new digital paradigm. The World Wide Web enabled instant communication and democratized access to information, but large platforms today capture much of the data and much of the value. The next generation of the internet, built on globally distributed ledgers, will democratize access to digital ownership, allowing participants to hold a stake in the internet economy’s growth.

True digital ownership allows network participants to control their data and own their intellectual property. “Value,” like text or images, can be represented by digital information and can move frictionlessly across the internet. Unlike other forms of information, value needs the protection provided by blockchains to safeguard it against being altered or “double spent.” In Web 3.0, value will be transferred as easily as we exchange information today.

The explosive growth in the value of digital art and collectibles in the last year is only the beginning. We believe that blockchain technology, crypto networks, and the internet of value will soon permeate many

 

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sectors of the economy and segments of society. Galaxy exists not only to facilitate institutional adoption of the new digital asset class but also to grow this emerging cryptoeconomy and help engineer a new economic paradigm.

Bridging Then and Now

Galaxy serves as a bridge between traditional finance and the cryptoeconomy to help both incumbents and startups shape the economy of the future. Institutions and innovators alike need a trusted partner built to serve the needs of a global, digitally connected financial system. Galaxy is that partner. Through our diversified business lines and focus on digital assets, we service a growing number of institutions—Asset Managers, Banks, Corporations, Endowments, and Pensions, among others—all seeking exposure to the cryptoeconomy.

We also invest in innovators, providing founders with capital and advice, and opening our network to help theirs expand. The companies across our multiple venture portfolios denote our belief in the cryptoeconomy and provide us with unique insight into its cutting edge.

As the world of digital finance continues to evolve, Galaxy will evolve alongside it. Our leadership team brings to bear decades of experience across capital markets, asset management, technology, and venture investing. This position at the intersection of crypto and traditional finance allows us to offer products with familiar structures, built for digital assets, while also providing financial solutions unique to the cryptoeconomy, built on blockchains, that look and feel different from their predecessors.

Today, we are aggressively investing in our businesses and expanding globally. Our acquisition of BitGo, a leading custody provider for digital assets, will make Galaxy the one-stop-shop for institutions seeking financial services in the cryptoeconomy. The acquisition also furthers our vision to bring together the best of Wall Street and Silicon Valley and to maintain a blue-chip leadership team that affords clients the assurance of veteran guidance as they navigate our burgeoning industry.

The Future

Past cryptocurrency price cycles, continued speculative trading in digital assets, and evolving regulatory guidelines suggest that our financials may be volatile in the short term. From our founding, however, Galaxy has taken a long view. Our industry is still in its infancy. We are building a business designed to succeed regardless of short-term market conditions.

All our stakeholders believe in the promise of digital assets and the cryptoeconomy, and our goal is to bring as many participants as possible into an expanding tent. As I write in December 2021, the market cap of cryptocurrencies—only one slice of the cryptoeconomy—represents over 0.5% of global wealth, up from 0.1% this time one year ago. We believe this number will continue to grow, and that Galaxy will grow with it. We are working tirelessly every day to capture this momentum. Crypto is a 24/7 industry, so Galaxy is a 24/7 business. Someone on our team is missing holiday dinners, Friday nights with friends, and Sunday mornings with family to be available to our clients. I’d like to take a moment to thank them for their dedication. Our greatest assets go up and down our elevators every day.

The blockchain revolution is just beginning. I believe that crypto networks and digital assets will reshape the world in ways we can’t imagine. Our company’s very name seeks to communicate that inconceivable expansiveness. I am grateful for your trust in us to take you on this journey.

Mike Novogratz
CEO, Galaxy Digital

 

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QUESTIONS & ANSWERS ABOUT THE PROPOSED TRANSACTIONS

The following questions and answers briefly address some commonly asked questions relating to the Proposed Transactions (as defined below), including the proposals to be presented at the special meeting of GDHL’s shareholders, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association, and the questions that shareholders of GDHL and BitGo may have relating to the Proposed Transactions. The following questions and answers may not include all of the information that may be important to you and that you should consider in making a decision with respect to the proposals described herein. Additionally, the following questions and answers, as well as the summary section that follows, are not meant to be a substitute for the information contained in the remainder of this prospectus, and this information is qualified in its entirety by the more detailed descriptions and explanations contained elsewhere in this prospectus. You are urged to read carefully the remainder of this prospectus, including the attached annexes. You should pay special attention to the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

General Questions & Answers for GDHL Shareholders

Q:   Why are GDHL shareholders receiving this prospectus?

A:

GDHL shareholders are receiving this prospectus because they are being asked to consider and vote upon, among other things, a proposal to approve certain reorganization transactions, including a domestication of GDHL and GDH LP, as described in this prospectus. This prospectus is furnished to GDHL shareholders in connection with the solicitation of proxies by GDHL management for use at the special meeting, which shall constitute an extraordinary general meeting for purposes of GDHL’s memorandum and articles of association (the “Meeting”), of the holders of ordinary shares of GDHL to be held in person on [•], 2022 at [•] (local time) at [•] and virtually via live webcast at [•]. Subject to the necessary approval of GDHL shareholders, among other transactions, GDHL expects to (i) deregister under the Cayman Islands Companies Act (As Revised) and domesticate under Section 388 of the Delaware General Corporation Law, pursuant to which domestication the jurisdiction of incorporation of GDHL will be transferred by way of continuation from the Cayman Islands to the State of Delaware (the “Domestication” and GDHL following the Domestication, “GDH Delaware”), (ii) consummate certain related corporate reorganization transactions, including the amendment, prior to the Domestication, of GDHL’s existing share capital and memorandum and articles of association, a copy of which is attached to this Management Circular/Prospectus as Annex A, to authorize and provide for the issuance and terms of Class B ordinary shares of GDHL (the “Governing Documents Amendment,” and, all such related corporate reorganization transactions, collectively with the Domestication, the “Reorganization”) and (iii) consummate a merger with Reorganization Merger Sub, in which Reorganization Merger Sub will merge with and into GDH Delaware, with GDH Delaware continuing as the surviving corporation and a direct wholly-owned subsidiary of Pubco (the “Reorganization Merger”), with Pubco succeeding GDHL as the publicly traded company in which existing holders of GDHL ordinary shares will own their equity interests.

​

In addition, pursuant to the registration statement of which this prospectus forms a part, Pubco is registering the issuance of shares of Pubco Class A common stock that will ultimately be held by GDHL shareholders upon completion of the Reorganization and the Reorganization Merger.

This prospectus and its annexes contain important information about the transactions described herein and the other matters to be acted upon at the Meeting. You should read this prospectus, including the attached annexes, carefully and in its entirety.

YOUR VOTE IS IMPORTANT. IF YOU ARE A GDHL SHAREHOLDER, YOU ARE ENCOURAGED TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROSPECTUS, INCLUDING THE ATTACHED ANNEXES.

 

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Q:   What is the Galaxy Reorganization?

A:

Subject to the approval of GDHL shareholders, GDHL is proposing to effectuate a reorganization and domestication, which would also include a re-domiciliation of GDHL and GDH LP. In summary, under the proposed terms of the Reorganization, among other things:

​

◦

GDHL and GDH LP will redomicile from the Cayman Islands to the State of Delaware.

​

◦

GDHL and its affiliated entities’ corporate and capital structure will be reorganized so as to normalize it on the basis of frequently used “Up-C Structures” in the United States, with the Reorganization including the following steps:

​

•

Pubco, a new Delaware-incorporated holding company, will become the successor public company of GDHL, with all outstanding GDHL ordinary shares ultimately being converted into and exchanged for shares of Class A common stock of Pubco.

​

•

The existing organizational documents of GDH LP will be amended and restated, including to provide that Michael Novogratz, the Chief Executive Officer and Founder of GDHL, who currently controls the general partnership interests of GDH LP, will transfer control of such general partnership interests to Pubco. However, notwithstanding such transfer of control of the general partnership interests of GDH LP to Pubco, Michael Novogratz will continue to ultimately effectively control the operations of GDH LP by virtue of his ownership of the new voting securities of Pubco that will be issued to entities controlled by him, as described below (i.e., Michael Novogratz will have the same control over GDH LP he has now, but through his control of Pubco rather than directly through the general partnership interests of GDH LP).

​

•

Pubco will issue new voting securities to entities controlled by Michael Novogratz and other holders of Class B Units (as defined below) of GDH LP (such holders collectively, the “Existing LPs”) that will entitle them to vote (but not hold any economic rights) at the Pubco level, as though they had converted their existing Class B Units of GDH LP to Class A common stock of Pubco. The holder of each such voting security of Pubco will also hold a LP Unit (as defined below) of GDH LP that will entitle its holder to economic rights in GDH LP and that cannot be transferred without a concurrent transfer of such a voting security of Pubco. As a result of such issuance, Michael Novogratz is expected to own approximately 62.3% of Pubco’s voting power immediately following the Reorganization and the Reorganization Merger.

​

•

Pubco will enter into, and agree to certain payment rights and obligations pursuant to, an amendment and restatement of the existing tax receivable agreement between GDHL, GDH LP and certain other parties thereto.

​

◦

The “variable voting rights” attached to GDHL’s ordinary shares that currently restrict the aggregate votes that may be cast by U.S. shareholders will be eliminated.

​

◦

Pubco intends to apply to list its Class A Common Stock on the Nasdaq.

​

Q:   What else will happen in the Reorganization and in the Reorganization Merger?

A:

In the Domestication, all of the issued and outstanding Class A ordinary shares of GDHL will convert, automatically and by operation of law and without redemption or cancellation, on a one-for-one basis into an equivalent number of shares of Class A common stock of GDH Delaware and GDH Delaware will, pursuant to its post-Domestication certificate of incorporation, be authorized to issue up to 500 million shares of Class B common stock. Additionally, in the Domestication, GDHL will change its name to, and GDH Delaware’s name will be, “Galaxy Digital Holdings Inc.”

​

In connection with the Domestication, the memorandum and articles of association of GDHL (as amended by the Governing Documents Amendment) (the “Existing Organizational Documents”) will be amended and restated (as proposed to be amended and restated, the “Proposed Organizational Documents,” and such amendment, the “Domestication Charter and Bylaws

 

2

 

Amendment”). The Proposed Organizational Documents will be in effect as the governing documents of GDH Delaware upon the completion of the Domestication, but prior to the consummation of the Reorganization Merger, and will provide for two classes of common stock of GDH Delaware: Class A common stock and Class B common stock.

In the Reorganization Merger, (i) each share of Class A common stock and Class B common stock of GDH Delaware will convert, automatically and by operation of law, on a one-for-one basis into one share of Class A common stock and Class B common stock of Pubco, respectively, and (ii) the certificate of incorporation and bylaws of Pubco will be amended and restated to be substantively identical to the Proposed Organizational Documents (and the term “Proposed Organizational Documents” shall refer, following the Reorganization Merger, to the certificate of incorporation and bylaws of Pubco as so amended). Following the Reorganization Merger, each share of Class A common stock and Class B common stock of Pubco will entitle its holder to one vote per share on all matters submitted to a vote of Pubco stockholders. Shares of Class B common stock of Pubco will not have any rights to receive dividends or distributions on liquidation of Pubco (beyond their par value).

As a result of and following the Reorganization and the Reorganization Merger, Pubco will succeed GDHL as the publicly traded company in which existing holders of GDHL ordinary shares will own their interests, and all securities being registered pursuant to the registration statement of which this prospectus is a part will be issued by Pubco as the continuing parent entity following such transactions.

Following the Reorganization and the Reorganization Merger, Pubco will be a holding company. All of our activities are, and will following the Reorganization and the Reorganization Merger be, conducted through GDH LP and its subsidiaries, and Pubco’s principal assets following the Reorganization and the Reorganization Merger will be its direct and indirect ownership of (i) certain limited partnership interests of GDH LP, which will entitle it to a corresponding percentage ownership of the economic interest in our business, and (ii) all of the general partnership interests of GDH LP, which will entitle it to control our business. Following the Reorganization and the Reorganization Merger, (i) Pubco will own 100% of GDH Delaware, which will be the sole general partner of GDH LP and thereby will control all actions of GDH LP, and (ii) entities controlled by Michael Novogratz, the Chief Executive Officer and Founder of GDHL, will own approximately 62.3% of Pubco’s voting securities and ultimately effectively control our business.

Q:   Why is GDHL issuing shares of Class B common stock?

A:

GDHL shareholders, excluding persons required to be excluded for the purpose of such vote under Multilateral Instrument 61-101—Protection of Minority Securityholders in Special Transactions (“MI 61-101” and such excluded persons “Excluded Shareholders”), are further being asked to consider and vote upon the issuance, immediately following the Domestication, of a number of shares of Class B common stock of GDH Delaware (which shares of Class B common stock of GDH Delaware will convert automatically and by operation of law on a one-for-one basis into shares of Class B common stock of Pubco in the Reorganization Merger) to each Existing LP of GDH LP equal to the number of such Class B Units of GDH LP held by each such Existing LP of GDH LP (the “Issuance of Class B Common Stock”).

​

Q:   When will the Reorganization and the Reorganization Merger occur?

A:

Subject to the necessary approval of GDHL shareholders, GDHL’s board of directors may adopt the Reorganization and the Reorganization Merger at any time. The Reorganization and the Reorganization Merger are not conditioned on the BitGo Acquisition (as defined below) being completed. However, completion of the Reorganization and Reorganization Merger is a condition to the completion of the BitGo Acquisition. As a result, if the Reorganization and Reorganization Merger have not been completed prior to that date, and assuming the Governing Documents Amendment, the Domestication and the Domestication Charter and Bylaws Amendment are approved by GDHL shareholders, the Reorganization is expected to occur on the business day prior to the date of the Reorganization Merger and the closing of the BitGo Acquisition (as defined

​

 

3

 

below), unless GDHL and Pubco elect to complete the Reorganization earlier. The Reorganization Merger is expected to occur on the date of the closing of the BitGo Acquisition, one minute prior to the effective time of the Second Merger. The BitGo Acquisition is expected to occur upon the satisfaction (or, if permitted, waiver) of all of the conditions set forth in the Agreement and Plan of Merger by and among GDHL, GDH LP, Pubco, GDH Titan Merger Sub 1, Inc. (“Reorganization Merger Sub”), GDH Titan Merger Sub 2, Inc. (“Merger Sub 2”), BitGo and Fortis Advisors LLC in its capacity as the representative of the equityholders thereunder (as it may be amended, modified or otherwise supplemented from time to time, the “Merger Agreement”), a copy of which is attached to this prospectus as Annex D, and described in this prospectus.

General Questions & Answers for BitGo Stockholders

Q:   Why are BitGo stockholders receiving this prospectus?

A:

BitGo stockholders are receiving this prospectus because they are being asked to approve and adopt the Merger Agreement by signing and returning the written consent furnished to BitGo stockholders with this prospectus, a form of which is attached to this prospectus as Annex F (the “Written Consent”). Subject to the terms and conditions set forth in the Merger Agreement, including the necessary approval of BitGo stockholders, Merger Sub 2 will merge with and into BitGo, with BitGo continuing as the surviving corporation and ultimately an indirect wholly-owned subsidiary of GDH LP and a consolidated subsidiary of Pubco, and, in such merger, BitGo stockholders will receive cash and shares of Class A common stock of Pubco in exchange for their shares of stock of BitGo (the “Second Merger” and, together with the Reorganization Merger, the “Mergers”).

​

In addition, pursuant to the registration statement of which this prospectus forms a part, Pubco is registering shares of Pubco Class A common stock issuable to BitGo stockholders upon completion of the Second Merger.

This prospectus and its annexes contain important information about the transactions described herein and the other matters to be acted upon by the Written Consent. You should read this prospectus, including the attached annexes, carefully and in their entirety.

YOUR VOTE IS IMPORTANT. IF YOU ARE A BITGO STOCKHOLDER, YOU ARE ENCOURAGED TO SIGN AND RETURN THE WRITTEN CONSENT AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROSPECTUS, INCLUDING THE ATTACHED ANNEXES.

Q:   What is the BitGo Acquisition?

A:

Following the Reorganization and the Reorganization Merger, subject to the terms and conditions of the Merger Agreement, Pubco and GDH LP will acquire BitGo as a result of the merger of Merger Sub 2 with and into BitGo, with BitGo continuing as the surviving corporation and ultimately an indirect wholly-owned subsidiary of GDH LP and a consolidated subsidiary of Pubco (the “BitGo Acquisition”). In the BitGo Acquisition, pursuant to the Merger Agreement, BitGo stockholders will receive cash and shares of Class A common stock of Pubco in exchange for their shares of stock of BitGo.

​

While the consummation of the BitGo Acquisition is conditioned on, among other things, the Reorganization being completed, the consummation of the Reorganization is not conditioned on the BitGo Acquisition being completed. The BitGo Acquisition is not required to be, and will not be, at any time submitted to a vote of GDHL, GDH Delaware or Pubco shareholders.

Q:

Are there any important risks related to the Reorganization or GDHL’s or BitGo’s businesses of which BitGo stockholders should be aware?

​

A:

Yes, there are important risks related to the Reorganization and the other transactions discussed in this prospectus and GDHL’s, BitGo’s and Pubco’s businesses. You are urged to carefully read in its entirety the section entitled “Risk Factors.”

​

 

4

 

Additional Questions & Answers About the Special Meeting of GDHL Shareholders

Q:

What is the purpose of the Meeting?

​

A:

The purpose of the Meeting of GDHL shareholders is to vote on proposals related to the Reorganization, comprised of the Domestication, the Governing Documents Amendment, the Domestication Charter and Bylaws Amendment, Issuance of Class B Common Stock and, if necessary or appropriate, the adjournment of the Meeting to a later date or dates, and to transact such other business as is proper at the Meeting.

​

Q:   Where and when will the Meeting be held?

A:

The Meeting will be held in person on [•], 2022 at [•] (local time) at [•] and virtually via live webcast at [•].

​

Q:   How do I attend a virtual meeting?

A:

If you are a Registered Shareholder, GDHL’s transfer agent, TSX Trust Company, will have sent you a form of proxy. Registered Shareholders planning to access and vote at the Meeting should not complete the Proxy or return it to TSX Trust Company if you will be accessing and voting at the Meeting during the webcast. If you are planning to access the Meeting, your Proxy will be required in order for you to complete the instructions below:

​

1.

Log in at [•] at least 15 minutes before the Meeting starts.

​

2.

Click on “I have a control number”

​

3.

Enter your 12-digit control number (your control number is located on your Proxy)

​

4.

Enter the password: [•] (case sensitive)

​

5.

Follow the instructions to access the Meeting and vote when prompted

​

Beneficial Shareholders wishing to access and vote at the Meeting during the live webcast can do so as follows:

1.

Appoint yourself as proxyholder by writing your name in the space provided on the Proxy or voting instruction form. Do not fill out your voting instructions

​

2.

Sign and send it to your intermediary, following the voting deadline and submission instructions on the voting instruction form

​

3.

Get a control number by contacting TSX Trust Company at tsxtrustproxyvoting@tmx.com by [•] (local time) on [•]

​

4.

Log in at [•] at least 15 minutes before the meeting starts

​

5.

Click on “I have a control number”

​

6.

Enter the control number provided to you by tsxtrustproxyvoting@tmx.com

​

7.

Enter the password: [•] (case sensitive)

​

8.

Follow the instructions to access the Meeting and vote when prompted

​

Q:   Who is soliciting the vote of GDHL shareholders?

A:

This prospectus is furnished in connection with the solicitation of proxies by GDHL’s management for use at the Meeting.

​

 

5

 

Q:   What are GDHL shareholders being asked to consider and vote upon at the Meeting?

A:

GDHL shareholders will vote on the following proposals at the Meeting:

​

1.

a special resolution to approve a reorganization comprised of:

​

a.

the Domestication (such proposal “Domestication Proposal”);

​

b.

the Governing Documents Amendment (such proposal the “Governing Documents Amendment Proposal”);

​

c.

upon the consummation of the Domestication, the amendment and restatement of the Existing Organizational Documents by their deletion in their entirety and the substitution in their place of the Proposed Organizational Documents (such proposal, the “Proposed Organizational Documents Proposal”); and

​

d.

four separate proposals with respect to certain material differences between the existing organizational documents and the proposed organizational documents of GDH Delaware following its domestication as a Delaware corporation (collectively, the “Domestication Charter and Bylaws Differences Proposals”);

​

2.

assuming the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal and the Domestication Charter and Bylaws Differences Proposals are approved, a resolution to approve, by a simple majority, excluding Excluded Shareholders, the Issuance of Class B Common Stock (such proposal, the “Issuance of Class B Common Stock Proposal”); and

​

3.

to approve by ordinary resolution the technical proposal to allow the chairman to adjourn the Meeting (the “Adjournment”) to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal, the Domestication Charter and Bylaws Differences Proposals and the Issuance of Class B Common Stock Proposal (such proposal, the “Adjournment Proposal” and together with the Domestication Proposal, the Governing Documents Amendment Proposal, the Proposed Organizational Documents Proposal, each of the Domestication Charter and Bylaws Differences Proposals and the Issuance of Class B Common Stock Proposal, the “Proposals”).

​

The Issuance of Class B Common Stock is a “related party transaction” pursuant to MI 61-101. GDHL’s board of directors formed a special committee of independent directors comprised of all the directors of GDHL, other than Michael Novogratz (the “Special Committee”), to consider the Reorganization.

After careful consideration of, among other things, the unanimous recommendation of the Special Committee, GDHL’s board of directors has determined (with the interested directors declaring their interest and abstaining on voting with respect to the resolutions related to the Reorganization) that the Proposed Transactions are in the best interests of GDHL and its shareholders and recommends that you vote or give instruction to vote “FOR” the approval of the Proposed Transactions.

Q:   What vote of GDHL shareholders is required to approve the Proposals presented at the Meeting?

A:

Each of the Proposals that must be approved by special resolution must be approved, as a matter of Cayman Islands law, by the affirmative vote of the holders of not less than two-thirds of the ordinary shares of GDHL who, being present in person or virtually or represented by proxy and entitled to vote at the Meeting, vote at the Meeting. Each of the Proposals that must be approved by ordinary resolution must be approved, as a matter of Cayman Islands law, by the affirmative vote of the holders of a majority of the ordinary shares of GDHL who, being present in person or virtually or represented by proxy and entitled to vote at the Meeting, vote at the Meeting. The Issuance of Class B Common Stock Proposal must be approved by a simple majority, excluding persons required to be excluded for the purpose of such vote under MI 61-101.

​

 

6

 

The Domestication Charter and Bylaws Amendment Proposal and each of the Domestication Charter and Bylaws Differences Proposals is conditioned on the approval of the Domestication Proposal. The Adjournment Proposal is not conditioned on the approval of any other Proposal.

Q:   Will any other matters be voted on at the Meeting?

A:

GDHL’s board of directors does not intend to present any other matters at the Meeting and does not know of any other matters that will be brought before GDHL’s shareholders for a vote at the Meeting. If any other matter is properly brought before the Meeting, your signed proxy gives authority to [•] and [•], as proxies, with full power of substitution, to vote on such matters at their discretion.

​

Q:   Will the Reorganization Merger be submitted to a vote of GDHL shareholders?

A:

Assuming the Reorganization is approved by GDHL shareholders, in accordance with applicable law, the Reorganization Merger is not required to be, and will not be, submitted to a vote of GDHL or GDH Delaware shareholders.

​

Q:   Will the BitGo Acquisition be submitted to a vote of GDHL shareholders?

A:

In accordance with applicable law, the BitGo Acquisition is not required to be, and will not be, at any time submitted to a vote of GDHL, GDH Delaware or Pubco shareholders. While the consummation of the BitGo Acquisition is conditioned on, among other things, the Reorganization being completed, the consummation of the Reorganization is not conditioned on the BitGo Acquisition being completed.

​

Q:   Who is entitled to vote at the Meeting?

A:

Only GDHL’s registered shareholders at the close of business on [•], 2022 (the “GDHL Record Date”) will be entitled to receive notice of, and to vote at, the Meeting or any adjournment thereof. GDHL shareholders who are unable to or who do not wish to attend the Meeting are requested to date and sign the enclosed form of proxy promptly and return it in the self-addressed envelope enclosed for that purpose or by any of the other methods indicated in the form of proxy.

​

Q:   What constitutes a quorum at the Meeting?

A:

The quorum for the transaction of business at the Meeting consists of two or more GDHL shareholders holding at least 25% in par value of GDHL’s ordinary shares entitled to vote at the Meeting being individuals present in person or virtually or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy. As of the GDHL Record Date, [•] ordinary shares of GDHL, in the aggregate, would be required to achieve a quorum.

​

Q:

What happens if a GDHL shareholder sells or otherwise transfers their ordinary shares of GDHL before the Meeting?

​

A:

The GDHL Record Date is earlier than the date on which the transactions that are the subject of the Proposals are expected to be completed. If you transfer your ordinary shares of GDHL after the GDHL Record Date, but before the Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Meeting. If you transfer your ordinary shares of GDHL prior to the GDHL Record Date, you will have no right to vote those shares at the Meeting.

​

Q:

How many votes does each GDHL shareholder have?

​

A:

Subject to the Certification Process Adjustment (as described below), each GDHL shareholder is entitled to one vote for each ordinary share held by such GDHL shareholder as of the close of business on the GDHL Record Date. As of the close of business on the GDHL Record Date, there were [•] outstanding GDHL ordinary shares.

​

 

7

 

The Existing Organizational Documents provide for a “Certification Process Adjustment” whereby, in connection with any resolution passed by GDHL shareholders (each, a “Shareholder Resolution”), each GDHL shareholder shall be required to provide a certification as to its status, and the status of any person for whom the GDHL shareholder holds GDHL ordinary shares beneficially, as a United States resident or a non-United States resident. In connection with the Certification Process Adjustment, in respect of any Shareholder Resolution in a meeting or in writing, each GDHL shareholder shall be required to certify that, at the time of the meeting (or any adjournment thereof) at which the resolution is tabled, or in the case of the resolution being proposed as a written resolution, at the time of signifying its agreement to the proposed written resolution: (a) it is not a United States resident; and (b) to the extent it holds GDHL ordinary shares for the account or benefit of any other person, such person is not a United States resident (each GDHL shareholder not making such certification, a “Non-Certifying Shareholder”). GDHL shareholders who certify that they hold GDHL ordinary shares for the account or benefit of any other person who is a United States resident, will also be asked to certify the extent to which GDHL ordinary shares they own beneficially are owned beneficially for United States residents and to which GDHL ordinary shares they hold are owned beneficially for persons that are not United States residents. This Certification Process Adjustment is intended to preserve GDHL’s status as a “foreign private issuer” within the meaning of Rule 405 under the United States Securities Act of 1933 and Rule 3b-4 under the United States Securities Exchange Act of 1934 by ensuring that the aggregate total number of votes that Non-Certifying Shareholders are entitled to cast may never exceed 49% of the total number of votes that all GDHL shareholders are entitled to cast. For additional information, see the section entitled “The Special Meeting of GDHL Shareholders—​Certification Process Adjustment.”

Q:   What is the voting recommendation of GDHL’s board of directors?

A:

After careful consideration of, among other things, the unanimous recommendation of the Special Committee, GDHL’s board of directors has determined (with the interested directors declaring their interest and abstaining on voting with respect to the resolutions related to the Reorganization) that the Reorganization is (i) fair to GDHL shareholders, other than Excluded Shareholders, and (ii) in the best interest of GDHL, and recommends that you vote or give instruction to vote “FOR” the approval of the Reorganization.

​

Q:

When do proxies need to be submitted?

​

A:

To be effective, a properly executed proxy must be received not later than [•] (local time) on [•], 2022 or, if the Meeting is adjourned or postponed, not later than [•] (local time) on the day which is two business days preceding the date of the adjourned or postponed meeting. The time limit for the deposit of proxies may be waived by the chairman of the Meeting at his discretion, without notice, but the chairman of the Meeting is under no obligation to do so.

​

Q:

What is the difference between holding ordinary shares of GDHL as a Registered Shareholder and as a Beneficial Shareholder?

​

A:

Many GDHL shareholders hold their common shares through a stockbroker or bank (an “Intermediary” or “Intermediaries”) rather than directly in their own names.

​

“Registered Shareholders” means GDHL shareholders who hold GDHL’s ordinary shares in their own name.

“Beneficial Shareholders” means GDHL shareholders who do not hold GDHL’s ordinary shares in their own name and Intermediaries own securities on behalf of Beneficial Shareholders. As summarized below, there are some distinctions Registered Shareholders and Beneficial Shareholders.

Registered Shareholder—If your ordinary shares of GDHL are registered directly in your name with our transfer agent, you are a Registered Shareholder and this prospectus is being sent directly to you by GDHL. You may vote the ordinary shares registered directly in your name by completing and mailing the proxy or by voting in person or virtually at the Meeting.

 

8

 

Beneficial Shareholder—Beneficial Shareholders should note that the only proxies that can be recognized and acted upon at the Meeting are those deposited by Registered Shareholders (those whose names appear on the records of GDHL as the registered holders of GDHL’s ordinary shares) or as set out in the following disclosure. If GDHL’s ordinary shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those GDHL’s ordinary shares will not be registered in the shareholder’s name on the records of GDHL. Such GDHL’s ordinary shares will more likely be registered under the names of Intermediaries. Intermediaries are required to seek voting instructions from Beneficial Shareholders in advance of meetings. Every Intermediary has its own mailing procedures and provides its own return instructions to clients. There are two kinds of Beneficial Shareholders—those who object to their name being made known to the issuers of securities which they own (called “OBOs” for Objecting Beneficial Owners) and those who do not object to the issuers of the securities they own knowing who they are (called “NOBOs” for Non-Objecting Beneficial Owners). GDHL is taking advantage of the provisions of National Instrument 54-101—Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) that permit it to deliver the Notice, this Circular and the form of proxy (collectively, the “meeting materials”) directly to the NOBOs.

Q:   How can GDHL shareholders who are Registered Shareholders vote?

A:

If you are a Registered Shareholder, there are two ways to vote: (1) by completing and mailing your proxy, or (2) by voting in person or virtually at the Meeting.

​

If you are voting by mailing your proxy, to be effective, a properly executed proxy from a Registered Shareholder must be submitted using one of the following methods:

(a)

date and sign the proxy and return it to GDHL’s transfer agent, TSX Trust Company, by fax within North America at (416) 595-9593 or by mail to 301-100 Adelaide Street West, Toronto, Ontario, M5H 4H1; or

​

(b)

log on to the website of TSX Trust Company at www.voteproxyonline.com. Registered Shareholders must follow the instructions set out on the website and refer to the proxy for the holder’s account number and the proxy access number.

​

If you return your proxy but you do not indicate your voting preferences, the proxies will vote your GDHL ordinary shares FOR each of the Proposals and any other matter that is properly submitted to a GDHL shareholder vote at the Meeting. Only the form of proxy accompanying this prospectus will be counted.

The proxy must be executed by the Registered Shareholder, or if the applicable shareholder is a corporation, the proxy should be signed in its corporate name and its corporate seal must be affixed to the proxy or the proxy must be signed by an authorized officer whose title should be indicated. A proxy signed by an authorized officer or a person acting as attorney, executor, administrator or trustee, or in some other representative capacity, should reflect such person’s full title as such and should be accompanied by the appropriate instrument evidencing qualification and authority to act (unless such instrument has been previously filed with GDHL).

Q:   How can GDHL shareholders who are Beneficial Shareholders vote?

Beneficial Shareholders who are NOBOs can expect to receive a scannable Voting Instruction Form (“VIF”) from TSX Trust. The VIF is to be completed and returned to TSX Trust as set out in the instructions provided on the VIF. TSX Trust will tabulate the results of the VIFs received from NOBOs. By choosing to send these materials to you directly, GDHL (and not the Intermediary holding GDHL’s ordinary shares on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your VIF as specified in the request for voting instructions that was sent to you. Beneficial Shareholders who are OBOs should follow the instructions of their Intermediary carefully to ensure that their GDHL’s ordinary shares are voted at the Meeting. GDHL does not intend to pay for intermediaries to forward to OBOs under NI 54-101 the proxy-related materials and Form 54-101F7—Request for Voting Instructions Made by Intermediary, and in the case of an OBO, the OBO will not receive the

 

9

 

materials unless the OBO’s Intermediary assumes the cost of delivery. The proxy supplied to you by your broker will be similar to the proxy provided to Registered Shareholders by GDHL. However, its purpose is limited to instructing the Intermediary on how to vote your GDHL’s ordinary shares on your behalf. Most brokers delegate responsibility for obtaining instructions from clients to Broadridge in the United States and in Canada. Broadridge mails a VIF in lieu of a proxy provided by GDHL. The VIF will name the same persons as GDHL’s proxy to represent your GDHL’s ordinary shares at the Meeting. You have the right to appoint a person (who need not be a Beneficial Shareholder of GDHL), other than any of the persons designated in the VIF, to represent your GDHL’s ordinary shares at the Meeting and that person may be you. To exercise this right, insert the name of the desired representative (which may be you) in the blank space provided in the VIF. The completed VIF must then be returned to Broadridge by mail or facsimile or given to Broadridge by phone or over the internet, in accordance with Broadridge’s instructions. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of GDHL’s ordinary shares to be represented at the Meeting and the appointment of any representative. If you receive a VIF from Broadridge, the VIF must be completed and returned to Broadridge, in accordance with its instructions, well in advance of the Meeting in order to have your GDHL’s ordinary shares voted or to have an alternate representative duly appointed to attend the Meeting and vote your GDHL’s ordinary shares at the Meeting.

Non-registered GDHL shareholders who have not objected to their Intermediary disclosing certain ownership information about themselves to GDHL are referred to as “NOBOs.” Those non-registered GDHL shareholders who have objected to their Intermediary disclosing ownership information about themselves to GDHL are referred to as “OBOs.” GDHL has elected to send the Notice, this Circular and the form of proxy (collectively, the “meeting materials”) directly to the NOBOs, and, to the extent possible, indirectly through Intermediaries to the OBOs. The Intermediaries (or their service companies) are responsible for forwarding the meeting materials to each OBO, unless the OBO has waived the right to receive them. Intermediaries will frequently use service companies to forward the meeting materials to non-registered GDHL shareholders.

Q:

If a GDHL shareholder is not going to attend the Meeting in person or virtually, should they submit their proxy instead?

​

A:

Yes. Whether you plan to attend the Meeting or not, please read this prospectus carefully and vote your shares by completing, signing, dating and returning the enclosed proxy in the postage-paid envelope provided.

​

Q:

To whom and when do GDHL shareholders’ proxies need to be submitted?

​

A:

To be effective, a properly executed proxy must be received not later than [•] (local time) on [•], 2022 or, if the Meeting is adjourned or postponed, not later than [•] (local time ) on the day which is two business days preceding the date of the adjourned or postponed meeting. The time limit for the deposit of proxies may be waived by the chairman of the Meeting at his discretion, without notice, but the chairman of the Meeting is under no obligation to do so.

​

If you are voting by mailing your proxy, to be effective, a properly executed proxy from a Registered Shareholder must be submitted using one of the following methods:

(a)

date and sign the proxy and return it to GDHL’s transfer agent, TSX Trust Company, by fax within North America at (416) 595-9593 or by mail to 301-100 Adelaide Street West, Toronto, Ontario, M5H 4H1; or

​

(b)

log on to the website of TSX Trust Company at www.voteproxyonline.com. Registered Shareholders must follow the instructions set out on the website and refer to the proxy for the holder’s account number and the proxy access number.

​

Persons who are Beneficial Shareholders must complete and return the voting instruction form provided to them by their intermediary (such as a broker, custodian, trustee, nominee) and return it in accordance with the instructions accompanying such voting instruction form.

 

10

 

Q:   Can GDHL shareholders change their vote or revoke their proxy?

A:

In addition to any other manner permitted by law, a proxy may be revoked by:

​

(a)

executing a proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or their authorized attorney in writing, or, if the GDHL shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the proxy bearing a later date to TSX Trust Company or at the address of the registered office of GDHL at PO Box 309, Ugland House, Grand Cayman, KY1-1104, at any time up to and including the last business day that precedes the day of the Meeting or, if the Meeting is adjourned or postponed, the last business day that precedes any reconvening thereof, or to the chairman of the Meeting on the day of the Meeting or any reconvening thereof, or in any other manner provided by law; or

​

(b)

personally attending the Meeting and voting.

​

Q:   How are votes counted at the Meeting?

A:

GDHL will appoint a scrutineer at the Meeting, who will collect all proxies and ballots and tabulate the results. The scrutineer is typically a representative of GDHL’s transfer agent.

​

Q:   Does a proxy need to be signed?

A:

The proxy must be executed by the Registered Shareholder, or if the applicable shareholder is a corporation, the proxy should be signed in its corporate name and its corporate seal must be affixed to the proxy or the proxy must be signed by an authorized officer whose title should be indicated. A proxy signed by an authorized officer or a person acting as attorney, executor, administrator or trustee, or in some other representative capacity, should reflect such person’s full title as such and should be accompanied by the appropriate instrument evidencing qualification and authority to act (unless such instrument has been previously filed with GDHL).

​

Q:

What will happen if a GDHL shareholder signs and submits their proxy without indicating how they wish to vote?

​

A:

The persons named in the proxy will vote or withhold from voting GDHL ordinary shares represented thereby in accordance with your instructions on any ballot that may be called for. If you specify a choice with respect to any matter to be acted upon, your GDHL ordinary shares will be voted accordingly. In respect of a matter for which a choice is not specified in the proxy, the management appointee acting as a proxyholder will vote in favour of each matter identified in the proxy.

​

Q:   Who will solicit and pay the cost of soliciting proxies from GDHL shareholders?

A:

Solicitations of proxies will be primarily by mail, but may also be solicited personally or by Internet or telephone by directors, officers and regular employees of GDHL. They will not be paid any additional amounts for soliciting proxies. All costs of the solicitation will be borne by GDHL.

​

GDHL has also engaged D.F. King Canada to assist with the solicitation of proxies. For questions on voting your shares, please contact D.F. King Canada, by email at inquiries@dfking.com, by telephone at 1 (800) 835-0437 (toll free within Canada and the United States) or direct at 1-416-682-3825 (banks, brokers and collect calls outside Canada and the United States). GDHL has agreed to pay D.F. King Canada a fee of $17,750, plus a potential $17,750 success fee and reimbursement of certain disbursements. GDHL will also reimburse D.F. King Canada for certain out-of-pocket losses, damages and expenses.

Q:

What should GDHL shareholders do if they receive more than one set of voting materials?

​

A:

GDHL shareholders may receive more than one set of voting materials, including multiple copies of this prospectus and multiple proxies or VIFs. For example, if you hold your shares in more than one brokerage account, you will receive a separate VIF for each brokerage account in which you

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11

 

hold shares. If you are a Registered Shareholder and your shares are registered in more than one name, you will receive more than one proxy. Please complete, sign, date and return each proxy and VIF that you receive in order to cast your vote with respect to all of your GDHL ordinary shares.

Q:   What should GDHL shareholders do now?

A:

GDHL shareholders are urged to read carefully and consider the information contained in this prospectus, including the section entitled “Risk Factors,” and the annexes attached hereto. GDHL shareholders should then vote as soon as possible in accordance with the instructions provided in this prospectus and on the enclosed proxy or, if you hold your shares through a brokerage firm, bank or other nominee, on the VIF provided by the broker, bank or nominee.

​

Q:   Who can help answer GDHL shareholders’ questions?

A:

If you are a GDHL shareholder and have questions about the Meeting or the Proposals, or if you need additional copies of this prospectus or the enclosed proxy, you should contact:

​

Galaxy Digital Holdings Ltd.
300 Vesey Street
New York City, New York 10282, United States
Attention: Investor Relations
Email: investor.relations@galaxydigital.io

You may also contact GDHL’s strategic shareholder advisor and proxy solicitation agent:

D.F. King Canada
by email at inquiries@dfking.com,

by telephone at 1 (800) 835-0437 (toll free within Canada and the United States) or direct at 1 (416) 682-3825 (banks, brokers and collect calls outside Canada and the United States)

You may also obtain additional information about us from documents filed with Canadian securities regulatory authorities by following the instructions in the section of this prospectus entitled “Where You Can Find More Information.”

To obtain timely delivery, GDHL shareholders must request additional copies of this prospectus or the enclosed proxy or any other materials no later than five business days prior to the Meeting.

Additional Questions & Answers About the Reorganization and the Reorganization Merger

Q:   How will the Reorganization affect GDHL ordinary shares?

A:

In the Domestication, all of the issued and outstanding Class A ordinary shares of GDHL will convert, automatically and by operation of law and without redemption or cancellation, on a one-for-one basis into an equivalent number of shares of Class A common stock of GDH Delaware and GDH Delaware will, pursuant to its post-Domestication certificate of incorporation, be authorized to issue up to 500 million shares of Class B common stock. Then, in the Reorganization Merger, GDH Delaware shareholders will receive an equivalent number of shares of Class A common stock and Class B common stock of Pubco in exchange for their shares of Class A common stock and Class B common stock of GDH Delaware, respectively.

​

Q:

What exchanges will Pubco be listed on following the Reorganization and the Reorganization Merger?

​

A:

GDHL’s ordinary shares are currently listed on the Toronto Stock Exchange (the “TSX”). In connection with the Reorganization, Pubco intends to apply to have Pubco’s Class A common stock approved for listing on the Nasdaq Global Select Market (“Nasdaq”), either concurrently with or subsequent to consummation of the Reorganization, the Reorganization Merger and the BitGo Acquisition. For a period of time following the consummation of the Reorganization, and immediately following Pubco’s intended listing on the Nasdaq, Pubco will remain listed on the

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12

 

TSX. Pubco ultimately may choose to delist its shares from the TSX in the future, which would not require further shareholder approval under TSX rules provided an acceptable alternative market exists for Pubco’s Class A common stock. There can be no assurance as to whether such listing and/or delisting will occur on the terms described herein or at all.

Q:

What amendments will be made to the existing organizational documents of GDHL in the Reorganization?

​

A:

Prior to the Domestication, GDHL intends to complete the Governing Documents Amendment, in which GDHL’s existing memorandum and articles of association will be amended to authorize and provide for the issuance and terms of up to 500 million Class B ordinary shares of GDHL.

​

In connection with the Domestication, GDHL will complete the Domestication Charter and Bylaws Amendment, in which the memorandum and articles of association of GDHL (as amended by the Governing Documents Amendment) will be amended and restated by their deletion in their entirety and the substitution in their place of the proposed new certificate of incorporation, substantially in the form attached to this prospectus as Annex B and the proposed new bylaws, substantially in the form attached to this prospectus as Annex C. The Proposed Organizational Documents will be in effect as the governing documents of GDH Delaware upon the completion of the Domestication, but prior to the consummation of the Reorganization Merger, and will provide for two classes of common stock of GDH Delaware: Class A common stock and Class B common stock.

Q:   Will the Proposed Organizational Documents be the governing documents of Pubco?

A:

In the Reorganization Merger, the certificate of incorporation and bylaws of Pubco will be amended and restated to be substantively identical to the Proposed Organizational Documents (and the term “Proposed Organizational Documents” shall refer, following the Reorganization Merger, to the certificate of incorporation and bylaws of Pubco as so amended).

​

Q:

How will the Proposed Organizational Documents differ from GDHL’s Existing Organizational Documents?

​

A:

The Existing Organizational Documents under the Cayman Islands Companies Act (As Revised) differ materially from the Proposed Organizational Documents of GDH Delaware and, after the Reorganization Merger, Pubco, under the DGCL. For a further discussion, see the section entitled “The Proposed Transactions—The Reorganization—The Domestication Charter and Bylaws Amendment.”

​

Each share of Class A common stock and Class B common stock of GDH Delaware (prior to the Reorganization Merger) and Pubco (following the Reorganization Merger) will entitle its holder to one vote per share on all matters submitted to a vote of our stockholders. Shares of Class B common stock of GDH Delaware (prior to the Reorganization Merger) and Pubco (following the Reorganization Merger) will not be entitled to economic interests.

Among other differences between the Existing Organizational Documents and the Proposed Organizational Documents, in order to comply with applicable money transmitter laws in the United States, the Proposed Organizational Documents provide that GDH Delaware’s (or, following the Reorganization Merger, Pubco’s) board may take certain actions including (i) preventing the transfer of capital stock, (ii) redeeming capital stock at par or (iii) restricting the exercise of rights with respect to capital stock, in certain circumstances in which a stockholder would potentially hold more than 9.9% of the total issued and outstanding shares of GDH Delaware (or, following the Reorganization Merger, Pubco) on a fully diluted basis. See the section entitled “Description of Pubco Capital Stock—Certain certificate of incorporation, bylaws and statutory provisions—Anti-takeover effects of the Proposed Organizational Documents and certain provisions of Delaware law—Transfer Restrictions; Pubco’s Regulatory Redemption Right” in this prospectus.

Q:

What are the U.S. federal income tax consequences of the Reorganization and the Reorganization Merger to GDHL shareholders and holders of GDHL warrants?

​

A:

The Domestication may trigger U.S. federal income tax for U.S. Holders (as defined in “Certain

​

 

13

 

U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants”) of GDHL ordinary shares. In general, subject to the potential application of the PFIC rules (as described in “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants—U.S. Tax Consequences of the Domestication—PFIC Considerations with Respect to the Domestication”), U.S. Holders who own GDHL ordinary shares with a fair market value of at least $50,000 at the time of the Domestication, but who are not 10% shareholders (as defined in “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants—U.S. Tax Consequences of the Domestication”) will recognize gain (but not loss) with respect to the deemed receipt of shares of GDH Delaware common stock in the Domestication (unless they elect to include in income, as a dividend, the “all earnings and profits amount,” if any, as described in “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants—U.S. Tax Consequences of the Domestication”). Subject to the potential application of the PFIC rules, U.S. Holders who are 10% shareholders on the date of the Domestication will generally be required to include in income, as a dividend, the “all earnings and profits amount,” if any. Although the determination of earnings and profits for U.S. federal income tax purposes is complex and depends on a number of factors, GDHL has determined that it did not have any earnings and profits in any taxable year since its formation through its taxable year ended December 31, 2020, and does not expect to have any earnings and profits for its taxable year ended December 31, 2021 and its taxable year ending as of the date of the Domestication. Subject to the potential application of the PFIC rules, U.S. Holders who own GDHL ordinary shares with a fair market value of less than $50,000 and who are not 10% shareholders should not be required to recognize any gain or loss in connection with the Domestication, and generally should not be required to include any part of the “all earnings and profits amount,” if any, in income. Subject to the rules described above and the potential application of the PFIC rules, a U.S. Holder of GDHL warrants should not recognize gain or loss with respect to the exchange of GDHL warrants for GDH Delaware warrants in the Domestication.

In addition to the foregoing, the Domestication could be a taxable event to U.S. Holders under the PFIC provisions of the Code. See “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants” below for more information regarding certain U.S. federal income tax considerations relevant to U.S. Holders with respect to the Domestication, including the potential application of the PFIC rules.

GDHL has received an opinion of counsel to the effect that, under the U.S.federal income tax laws in effect as of the date of such opinion, (i) the Reorganization Merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) the exchange by a U.S. Holder of GDH Delaware Class A common stock (received in the Domestication) for Pubco Class A common stock pursuant to the Reorganization Merger, taken together with the Second Merger, should qualify as an exchange governed by Section 351(a) of the Code. However, the obligations of the parties to consummate the Reorganization Merger and the Second Merger are not conditioned upon the receipt, as of the closing of such transactions, by either GDHL or BitGo of a tax opinion from its counsel or any other counsel on the qualification of the Reorganization Merger as a “reorganization” or of such exchange as an exchange governed by Section 351(a) of the Code. An opinion of counsel represents counsel’s legal judgment but is not binding on the IRS or any court, and relies on the present and continuing accuracy of certain assumptions, representations, warranties and covenants of the parties, including representations as to certain facts that cannot be known until the closing of the Second Merger. If any of these assumptions, representations, warranties or covenants is or becomes incorrect, incomplete or inaccurate, or is violated, or if the IRS were to successfully challenge the status of the Reorganization Merger as a “reorganization” within the meaning of Section 368(a) of the Code or as an exchange governed by Section 351(a) of the Code, the tax consequences of the Reorganization Merger could differ from those set forth below in the section entitled “Certain U.S. Federal Income Tax Considerations,” and U.S. Holders

 

14

 

of GDH Class A common stock or GDH Delaware warrants could be subject to U.S. federal income tax upon the receipt of Pubco Class A common stock or Pubco warrants, as applicable, in the Reorganization Merger. For a more detailed discussion of the consequences of the Reorganization Merger to U.S. Holders, see the section entitled “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants—U.S. Tax Consequences of the Reorganization Merger.”

U.S. Holders are strongly urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the Domestication and the Reorganization Merger to them in their particular circumstances, including whether they would be considered 10% shareholders, whether to make the “all earnings and profits” election where applicable, the appropriate filing requirements with respect to this election and the potential application of the PFIC rules to the Domestication.

Non-U.S. Holders (as defined in “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants”) generally should not be subject to U.S. federal income tax in respect of the Domestication and Reorganization Merger, unless they have certain connections to the United States. However, depending on their particular circumstances (including their jurisdiction of fiscal residence), Non-U.S. Holders may be subject to non-U.S. taxes in respect of the Proposed Transactions.

The summary provided above is qualified in its entirety by the section “Certain U.S. Federal Income Tax Considerations—Material U.S. Tax Consequences of the Domestication and Reorganization Merger to GDHL Shareholders and Holders of GDHL Warrants” below, which sets forth the material U.S. federal income tax considerations generally relevant to GDHL shareholders and holders of GDHL warrants participating in the Domestication and the Reorganization Merger. GDHL shareholders and holders of GDHL warrants are urged to consult with their own tax advisors to determine the particular tax consequences to them of the Domestication and the Reorganization Merger, as well as the tax consequences of the ownership and disposition of Pubco Class A common stock or Pubco warrants received pursuant to these transactions.

Q:

Why does Galaxy intend to complete the Reorganization and the Reorganization Merger?

​

A:

The Reorganization is intended to normalize GDHL's corporate and capital structure and align all stakeholders’ interests at the Pubco level. GDHL’s board of directors and the Special Committee believe that the Reorganization and the Reorganization Merger will result in enhanced shareholder value. For a detailed description of GDHL’s background to and reasons for the Reorganization, see the section entitled “The Proposed Transactions—the Reorganization—GDHL’s Background to and Reasons for the Reorganization” in this prospectus.

​

Q:

Do GDHL shareholders have appraisal or dissenters’ rights if they object to the Reorganization or the Reorganization Merger?

​

A:

No. There are no appraisal or dissenter rights available to holders of GDHL ordinary shares in connection with the Reorganization or the Reorganization Merger under Cayman Islands law or the DGCL.

​

Q:   What interests do GDHL’s current officers and directors have in the Proposals?

A:

In considering the recommendation of GDHL’s board of directors to vote in favor of the Proposals, GDHL shareholders should be aware that, aside from their interests as GDHL shareholders, certain of our directors and officers have interests in the Proposals that are different from, or in addition to, those of other GDHL shareholders generally. GDHL’s directors were aware of and considered these interests, among other matters, in evaluating the Proposals and in recommending to GDHL shareholders that they approve the Proposals. GDHL shareholders should take these interests into account in deciding whether to approve the Proposals. For a further

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15

 

discussion of these interests, see the section entitled “Interests of GDHL’s Current Officers and Directors in the Proposed Transactions.”

Q:

Did GDHL’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Reorganization?

​

A:

No. GDHL’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Reorganization. However, the GDHL board of directors did establish a special committee of independent directors (the “Special Committee”) to consider the Reorganization and the Special Commitee retained independent counsel and an independent financial advisor. The members of the Special Committee and GDHL’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and expertise of GDHL’s advisors and the advisors of the Special Commitee, enabled them to make the necessary analyses and determinations regarding the Reorganization.

​

Additional Questions & Answers About the BitGo Acquisition and the Second Merger

Q:   What will happen in the Second Merger?

A:

In the Second Merger, subject to the terms and conditions of the Merger Agreement, Pubco and GDH LP will acquire BitGo as a result of the merger of Merger Sub 2 with and into BitGo, with BitGo continuing as the surviving corporation and ultimately an indirect wholly-owned subsidiary of GDH LP and a consolidated subsidiary of Pubco, which is referred to as the “BitGo Acquisition.” In the BitGo Acquisition, pursuant to the Merger Agreement, BitGo stockholders will receive cash and shares of Class A common stock of Pubco in exchange for their shares of stock of BitGo.

​

Q:

What will holders of BitGo stock receive in the Second Merger?

​

A:

The aggregate consideration to BitGo stockholders will consist of 33.8 million shares of Class A common stock of Pubco and $265 million in cash, subject to certain adjustments and deferred purchase price considerations, implying an aggregate transaction value of approximately $1.2 billion based on GDHL’s closing share price of $27.81 per share on May 4, 2021, the day prior to the date of the Merger Agreement (after converting such share price into U.S. dollars at an exchange rate of 1.2315 CAD to USD as of May 4, 2021), and $690.5 million based on GDHL’s closing share price of $12.59 on January 24, 2022 (after converting such share price into U.S. dollars at an exchange rate of 1.2656 CAD to USD as of January 24, 2022). Additionally, the number of shares of its Class A common stock that Pubco will issue to BitGo stockholders as consideration in the Second Merger may be adjusted upward to account for proceeds to BitGo from certain digital assets that are to be liquidated prior to the closing of the Second Merger in accordance with the Merger Agreement.

​

Subject to the applicable provisions of the Merger Agreement, at the effective time of the Second Merger, by virtue of the Second Merger and without any action on the part of the parties or holders of any securities of BitGo or any other person, each share of BitGo capital stock issued and outstanding immediately prior to the effective time (other than certain disregarded shares and dissenting shares) will automatically be cancelled and converted into the right to receive as merger consideration:

•

either (a) solely for BitGo stockholders that have made an election to only receive stock consideration, a number of shares of Pubco Class A common stock equal to the closing per share consideration value divided by the Galaxy share value price (as defined under “The Merger Agreement—Consideration in the Second Merger; Effect of the Second Merger on Capital Stock”), (b) solely for BitGo stockholders that have made an election to only receive cash consideration, an amount equal to the closing per share consideration value (as defined under “The Merger Agreement—Consideration in the Second Merger; Effect of the Second Merger on Capital Stock”) or (c) for BitGo stockholders that have not made an election to receive only stock consideration or only cash consideration, shares of Pubco

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16

 

Class A common stock as to 50% of such stockholder’s BitGo capital stock and cash as to the other 50% of such stockholder’s capital stock, in each case, subject to potential pro ration as described in the section entitled “The Merger Agreement—Consideration in the Second Merger; Effect of the Second Merger on Capital Stock”; and

•

certain post-closing adjustment considerations and deferred purchase price considerations in connection with indemnity obligations, BitGo equityholders’ representative expenses, and capital required to be held in connection with BitGo and its subsidiaries’ business activities for purposes of complying with capital adequacy or other regulatory requirements under the applicable law.

​

Because GDHL’s and, after the effectiveness of the Reorganization Merger, Pubco’s, share price will fluctuate between now and the closing of the Second Merger, and because the consideration to be received by BitGo stockholders will not be adjusted to reflect changes in GDHL’s and, after the effectiveness of the Reorganization Merger, Pubco’s, share price, BitGo stockholders cannot be sure of the value of the shares of Pubco Class A common stock they will receive in the transaction and the value of the shares of Pubco Class A common stock received by BitGo stockholders in the transaction may differ from the implied value based on the share price on the day prior to the date of the Merger Agreement or on the date this prospectus is first distributed to BitGo stockholders.

Q:   What will holders of BitGo stock options receive in the Second Merger?

A:

Each BitGo stock option with an exercise price for shares of BitGo common stock that is less than the closing per share consideration value (“in-the-money stock option”), whether vested or unvested, will be assumed by Pubco and converted into an option to purchase a number of shares of Pubco Class A common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of BitGo common stock subject to such in-the-money stock option multiplied by (b) the exchanged option ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient of (i) the per share exercise price for shares of BitGo common stock subject to the former BitGo in-the-money stock option divided by (ii) the exchanged option ratio, and each such converted option will otherwise be governed by the same terms and conditions applicable to the former BitGo in the-money stock option immediately prior to the effective time of the Second Merger (the “Second Merger Effective Time”).

​

Each holder of in-the-money stock option will also be entitled to receive in cash a pro rata portion of certain post-closing adjustment consideration and deferred purchase price consideration in connection with indemnity obligations, BitGo equityholders’ representative expenses, and capital required to be held in connection with BitGo and its subsidiaries’ business activities for purposes of complying with capital adequacy or other regulatory requirements under the applicable law, if any, in each case as if such holder held the shares of BitGo common stock subject to such in-the-money stock option as of immediately prior to the Second Merger Effective Time, but, to the extent that the holder of such in-the-money stock option is entitled to such cash consideration, it will only become payable with respect to the vested portion of the applicable in-the-money stock option, and any such cash consideration otherwise payable in respect of the portion of such in-the-money stock option that does not vest will instead be redistributed to all other holders of BitGo capital stock and in-the-money stock options on a pro rata basis, based on the relative number of shares of BitGo common stock held by each such holder as of immediately prior to the Second Merger Effective Time.

Each BitGo stock option that is not an in-the-money stock option, whether vested or unvested, will be cancelled and no consideration shall be delivered or receivable with respect thereto.

 

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Q:

Are there any important risks related to the BitGo Acquisition or GDHL’s or BitGo’s businesses of which BitGo stockholders should be aware?

​

A:

Yes, there are important risks related to the BitGo Acquisition and the other transactions discussed in this prospectus and GDHL’s, BitGo’s and Pubco’s businesses. You are urged to carefully read in its entirety the section entitled “Risk Factors.”

​

Q:

What will happen to BitGo stockholders’ shares of BitGo stock in the BitGo Acquisition?

​

A:

At the effective time of the Second Merger, shares of BitGo stock will no longer represent an ownership interest in BitGo, as each share of BitGo stock issued and outstanding immediately prior to such effective time (other than any cancelled shares or dissenting shares) will be cancelled and automatically converted into the right to receive the applicable portion of the aggregate merger consideration payable in respect thereof.

​

Q:

Do BitGo stockholders have appraisal or dissenters’ rights if they object to the Second Merger?

​

A:

Pursuant to Section 262 of the DGCL and Chapter 13 of the CCC (if deemed applicable to the transaction by virtue of Section 2115 of the CCC), holders of BitGo stock who do not execute the Written Consent approving and adopting the Merger Agreement and who otherwise strictly comply with the procedures set forth in Section 262 of the DGCL and Chapter 13 of the CCC, as applicable, have the right to seek appraisal of the fair value of their shares of BitGo stock, as determined by the Delaware Court of Chancery or applicable California superior court, respectively, if the Second Merger is completed. The “fair value” of shares of BitGo stock as determined by the Delaware Court of Chancery or applicable California superior court could be more or less than, or the same as, the value of the consideration that a BitGo stockholder would otherwise be entitled to receive under the terms of the Merger Agreement.

​

To exercise appraisal or dissenters’ rights, BitGo stockholders must strictly comply with the procedures prescribed by Delaware and/or California law, as applicable. These procedures are summarized in the section entitled “Appraisal and Dissenters’ Rights of BitGo Stockholders.” Failure to strictly comply with these provisions will result in a loss of the right of appraisal or dissent.

Q:   What are the conditions to the completion of the BitGo Acquisition?

A:

The completion of the BitGo Acquisition is subject to the satisfaction or waiver (to the extent permitted by applicable law) by Galaxy, BitGo and/or both parties, as further described in the section entitled “The Merger Agreement—Conditions to Completion of the Transaction”, of a number of conditions as set forth in the Merger Agreement, including, among others:

​

•

certain regulatory approvals, including the expiration or termination of any waiting period applicable to the transactions under the HSR Act (which waiting period under the HSR Act expired on June 18, 2021) and including approvals from the South Dakota Division of Banking, the Nationwide Mortgage Licensing System and Registry and the Connecticut Department of Banking, the New York State Department of Financial Services and FINRA;

​

•

no law having been enacted, or order or injunction having been issued or granted, by any governmental authority of competent jurisdiction or binding arbiter, in each case which has the effect of prohibiting, enjoining, restraining or otherwise making illegal the consummation of the transactions or impose a burdensome condition that GDHL (in its sole good faith discretion) declines to accept;

​

•

the approval of TSX;

​

•

the receipt of the BitGo stockholder approval of the BitGo Acquisition;

​

•

the receipt of the GDHL shareholder approval of the Reorganization;

​

•

the effectiveness of the registration statement of which this prospectus forms a part;

​

•

the consummation of the Domestication;

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18

 

•

certain of BitGo’s key employees (i) continuing to be active, full-time employees of BitGo, (ii) continuing to be ready, willing and able to continue their employment with BitGo immediately following the closing of the BitGo Acquisition on the terms set forth in their then-existing employment agreements (if any) and employment and retention agreements entered into by them in connection with the transactions, if applicable, and (iii) to the knowledge of the BitGo, not having indicated an intent to terminate or materially alter their employment with BitGo following the closing of the BitGo Acquisition; and

​

•

the sufficiency and compliance of BitGo and its subsidiaries with applicable capital adequacy requirements under applicable law.

​

As a result, the completion of the BitGo Acquisition may be subject to substantial delay. Each of the conditions may be waived by Galaxy, BitGo or other party or parties entitled to the benefit of such conditions.

The Merger Agreement may be terminated and the BitGo Acquisition and the other transactions contemplated thereby may be abandoned at any time prior to the closing if the approval of GDHL’s shareholders in respect of any Proposal (other than the Adjournment Proposal) is not obtained at the Meeting or at an adjournment thereof.

Q:   What happens if the BitGo Acquisition is not completed?

A:

If the transaction is not completed for any reason, BitGo stockholders will not receive any merger consideration for their shares of BitGo capital stock, and BitGo will remain an independent company.

​

Failure to complete the BitGo Acquisition could negatively impact BitGo, Galaxy and their respective businesses, prospects, financial condition and results of operations. The price of GDHL ordinary shares (or, following the Reorganization Merger, Pubco Class A common stock) may decline to the extent that its current market price reflects a market assumption that the BitGo Acquisition will be completed. In addition, some costs related to the transaction must be paid by the parties even if the transaction is not completed. Furthermore, the parties may experience negative reactions from their respective stockholders, customers and/or other persons with whom they have a business relationship, which could have an adverse effect on their respective businesses, financial condition and results of operations.

Q:   When is the closing of the BitGo Acquisition expected to occur?

A:

The closing of the BitGo Acquisition is expected to occur upon the satisfaction (or, if permitted, waiver) of all of the conditions set forth in the Merger Agreement and described in this prospectus. None of the parties to the Merger Agreement can predict, however, the actual date on which the BitGo Acquisition will be completed, or whether it will be completed, because the closing of the BitGo Acquisition is subject to certain factors outside the control of each of the parties to the Merger Agreement.

​

Q:

What are BitGo stockholders being asked to approve by executing the Written Consent?

​

A:

BitGo stockholders are being asked to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the BitGo Acquisition, by executing the Written Consent.

​

Q:

Who is entitled to execute the Written Consent?

​

A:

The BitGo board of directors has set [•] as the record date (the “BitGo Record Date”) for determining the BitGo stockholders entitled to execute and deliver the Written Consent. If you are a BitGo stockholder on the BitGo Record Date, you are urged to complete, date and sign the enclosed Written Consent and promptly return it to BitGo when your signature to the Written Consent will be solicited byBitGo.

​

 

19

 

Q:

What vote of BitGo stockholders is required to approve the BitGo Acquisition?

​

A:

The adoption of the Merger Agreement and the transactions contemplated thereby by BitGo stockholders requires the affirmative vote or consent of (i) the holders of at least a majority of the issued and outstanding shares of BitGo common and preferred stock (voting on an as-converted-to-BitGo Class A common stock basis with respect to any shares of BitGo preferred stock) entitled to vote thereon, (ii) the holders of at least a majority of the outstanding shares of BitGo common stock (voting on an as-converted-to-BitGo Class A common stock basis with respect to any shares of BitGo Class F common stock) entitled to vote thereon and (iii) the holders of at least a majority of the outstanding shares of BitGo preferred stock (voting on an as-converted-to-BitGo Class A common stock basis with respect to any shares of BitGo preferred stock) entitled to vote thereon (such vote or consent, the “BitGo stockholder Approval”).

​

Subsequently to the execution of the Merger Agreement, certain stockholders of BitGo, each of whom is an executive officer, directors, affiliate, founder, family member or holder of 5% or more of BitGo’s voting equity securities and who collectively hold approximately 70% of BitGo’s outstanding shares as of the BitGo Record Date, entered into a support agreement (the “Support Agreement”) pursuant to which they agreed to, as promptly as reasonably practicable (and in any event within two business days) after the registration statement of which this prospectus forms a part is declared effective by the Securities and Exchange Commission (the “SEC”), to execute and deliver a counterpart to the Written Consent. The execution and delivery of the Written Consent by all parties to the Support Agreement will constitute the BitGo stockholder Approval.

Q:   How can BitGo stockholders return the Written Consent?

A:

If you hold shares of BitGo stock as of the BitGo Record Date and you wish to submit your signature to the Written Consent, you must fill out the enclosed Written Consent, date and sign it, and promptly return it to BitGo. Once you have completed, dated and signed the Written Consent, deliver it to BitGo by emailing a .pdf copy of your written consent to [•] or by mailing your written consent to 2443 Ash Street, Palo Alto, CA 94306, Attention: Michael Belshe. BitGo stockholders should not send stock certificates with the signed Written Consent.

​

Q:   What is the deadline for signing and returning the Written Consent?

A:

BitGo has set [•], 2022 as the targeted final date for receipt of signatures to the Written Consent (such date, as it may be extended in accordance with the next sentence, the “Consent Deadline”). BitGo reserves the right to extend the Consent Deadline beyond [•], 2022 and any such extension may be made without notice to BitGo stockholders.

​

Q:   What happens if a BitGo stockholder does not return a signature to the Written Consent?

A:

If you hold shares of BitGo stock as of the BitGo Record Date and you do not return a signature to the Written Consent, that will have the same effect as a vote against the approval and adoption of the Merger Agreement and the transactions contemplated thereby. However, under the Support Agreement, certain stockholders of BitGo have agreed to, as promptly as reasonably practicable (and in any event within two business days) after the registration statement of which this prospectus forms a part is declared effective by the SEC, to execute and deliver the Written Consent and the execution and delivery of the Written Consent by all parties to the Support Agreement will constitute the BitGo stockholder Approval. Therefore, a failure of any other BitGo stockholder to sign and deliver the Written Consent is not expected to have any effect on the approval of the Merger Agreement and the transactions contemplated thereby.

​

Q:

Will there be a BitGo stockholder meeting in connection with the BitGo Acquisition?

​

A:

BitGo will not call or convene any meeting of its shareholders in connection with the BitGo Acquisition.

​

 

20

 

Q:   Did BitGo’s board of directors approve the BitGo Acquisition?

A:

Yes. After careful consideration, BitGo’s board of directors has considered the Second Merger and the other transactions contemplated by the Merger Agreement and has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of BitGo and BitGo’s stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, (iii) directed that the approval of the Merger Agreement and the transactions contemplated thereby be submitted for approval and adoption by BitGo’s stockholders and (iv) recommended the approval and adoption of the Merger Agreement and the transactions contemplated thereby by BitGo’s stockholders.

​

Q:

Why is the BitGo Acquisition not being submitted to a vote of GDHL shareholders?

​

A:

In accordance with applicable law, the BitGo Acquisition is not required to be, and will not be, at any time submitted to a vote of GDHL, GDH Delaware or Pubco shareholders.

​

Q:

Do any of BitGo’s directors or officers have interests in the BitGo Acquisition that may differ from or be in addition to other BitGo stockholders’ interests?

​

A:

Yes. BitGo stockholders should be aware that some of BitGo’s directors and officers have interests in the BitGo Acquisition that may be different from, or in addition to, the interests of BitGo stockholders generally. BitGo’s board of directors was aware of and considered these interests, among other matters, in deciding to approve the terms of the merger agreement and the transaction. For a further discussion of these interests, see the section entitled “Interests of BitGo’s Directors and Officers in the BitGo Acquisition.”

​

Q:

Did BitGo’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the BitGo Acquisition?

​

A:

No. BitGo’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the BitGo Acquisition. BitGo’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and expertise of BitGo’s advisors, including Qatalyst Partners, LP, which BitGo engaged as a financial advisor in connection with BitGo’s evaluation and negotiation of the BitGo Acquisition, enabled them to make the necessary analyses and determinations regarding the BitGo Acquisition. Accordingly, investors will be relying solely on the judgment of BitGo’s board of directors in valuing BitGo’s business and assuming the risk that BitGo’s board of directors may not have properly valued such business.

​

Q:

What are the U.S. federal income tax consequences of the Second Merger to BitGo stockholders?

​

A:

The portion of the cash consideration to a BitGo stockholder in the Second Merger that is attributable to (A) any indebtedness incurred by Merger Sub 2 for the purpose of funding all or a portion of the cash consideration pursuant to the Merger Agreement and (B) any cash of BitGo or any of its subsidiaries that is transferred to the exchange agent pursuant to the Merger Agreement, is intended to be treated as a distribution in partial redemption of the shares held by such BitGo Stockholder subject to the provisions of Section 302(a) and Section 302(b)(3) of the Code, though this treatment is not free from doubt. The payment of any other cash or consideration (other than Pubco Class A common stock) to any BitGo stockholder pursuant to the Second Merger should be treated as a sale by the BitGo stockholders of a portion of their BitGo stock.

​

In each case above, a U.S. Holder of shares of BitGo stock will generally recognize gain or loss equal to the difference between the cash or other consideration received (other than the Pubco Class A common stock) and the adjusted tax basis of the BitGo stocks treated as exchanged therefor.

BitGo has received an opinion of counsel to the effect that, under the U.S. federal income tax laws in effect as of the date of such opinion, the exchange by a U.S. Holder of BitGo stock for Pubco Class A common stock pursuant to the Second Merger, taken together with the Reorganization Merger, should qualify as an exchange governed by Section 351(a) of the Code. Notwithstanding

 

21

 

the delivery of such opinion, however, if the IRS were to successfully challenge such qualification, the tax consequences would differ from those set forth under the section entitled “Certain U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Consequences of the Second Merger to BitGo Stockholders,” and holders of BitGo stock could be subject to U.S. federal income tax upon the receipt of Pubco Class A common stock in the Second Merger. For a more detailed discussion of the consequences of the Second Merger to U.S. Holders, see the section entitled “Certain U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Consequences of the Second Merger to BitGo Stockholders.”

U.S. Holders are strongly urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the Second Merger to them in their particular circumstances.

The brief U.S. tax summary provided above is qualified in its entirety by the section “Certain U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Consequences of the Second Merger to BitGo Stockholders” below, including those qualifications, assumptions and limitations in that certain opinion referenced in that section, which provides a summary of the principal U.S. federal income tax considerations generally relevant to BitGo stockholders participating in the Second Merger. BitGo stockholders are urged to consult with and rely on their own tax advisors to determine the particular tax consequences to them of the Second Merger, as well as the tax consequences of the ownership and disposition of Pubco Class A common stock received pursuant to these transactions.

Q:   What should BitGo stockholders do now?

A:

BitGo stockholders are urged to read carefully and consider the information contained in this prospectus, including the section entitled “Risk Factors,” and the annexes attached hereto. Once the registration statement of which this prospectus forms a part has been declared effective by the SEC, BitGo will solicit your signature to the Written Consent. BitGo’s board of directors unanimously recommends that all BitGo stockholders approve the BitGo Acquisition by executing and returning to BitGo the Written Consent as soon as possible and no later than the consent deadline.

​

Q:   Who can help answer BitGo stockholders’ questions?

A:

If you are a BitGo stockholder and have questions about the Written Consent or the BitGo Acquisition, you should contact:

​

BitGo Holdings, Inc.
2443 Ash Street
Palo Alto, CA 94306
Attention: Michael Belshe
Telephone: 650-391-9130
Email: mike@bitgo.com

Q:

Where can BitGo stockholders find more information about GDHL and BitGo?

​

A:

BitGo stockholders can find more information about GDHL and BitGo from the various sources described under “Where You Can Find More Information.”

​

 

22

 

​

23

 

24

 

​

25

 

26

 

27

 

28

 

29

 

​

30

 

31

 

32

 

33

 

34

 

​

35

 

36

 

​

37

 

​

38

 

​

39

 

​

40

 

41

 

42

 

43

 

44

 

​	​	​	Existing Organizational Documents	​	​	Proposed Organizational Documents	​
Quorum for Shareholder Action—Organizational Documents Proposal A	​	​	The Existing Organizational Documents provide that two or more GDHL shareholders holding at least 25% in par value of the GDHL ordinary shares entitled to vote constitutes a quorum for a GDHL shareholder meeting.	​	​	The Proposed Organizational Documents provide that presence of a majority of the outstanding voting power of GDH Delaware at a GDH Delaware shareholder meeting constitutes a quorum for a GDH Delaware shareholder meeting, except where a separate vote by a class or series of classes of shares is required, the presence in person or by proxy of a majority of the voting power of all outstanding shares of stock of such class or series of classes, as applicable, constitutes quorum.	​
Removal of Directors— Organizational Documents Proposal B	​	​	The Existing Organizational Documents provide that any director may be removed by an affirmative vote of at least 662∕3% of the total voting power of the outstanding GDHL ordinary shares.	​	​	The Proposed Organizational Documents provide that directors may be removed, with or without cause, by the majority vote of the total voting power of outstanding shares of GDH Delaware common stock, voting together as a single class.	​
Exclusive Forum— Organizational Documents Proposal C	​	​	The Existing Organizational Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.	​	​	The Proposed Organizational Documents provide that, unless GDH Delaware consents to a different forum, (i) certain specified actions and proceedings may only be brought before the Court of Chancery of the State of Delaware (or another state or federal district court in the State of Delaware), and (ii) any complaint asserting a cause of action arising under the Securities Act may only be brought before the federal district courts of the United States.	​
Ownership Limitations— Organizational Documents Proposal D	​	​	The Existing Organizational Documents do not contain provisions relating to ownership limitations.	​	​	In order to comply with applicable money transmitter laws in the United States, the Proposed Organizational Documents provide that GDH Delaware’s board may take certain actions including (i) preventing the transfer of capital stock, (ii) redeeming capital stock at par or	​

45

 

​	​	​	Existing Organizational Documents	​	​	Proposed Organizational Documents	​
​	​	​	​	​	​	(iii) restricting the exercise of rights with respect to capital stock, in certain circumstances in which a stockholder would potentially hold more than 9.9% of the total issued and outstanding shares of GDH Delaware on a fully diluted basis.	​

46

 

47

 

​

48

 

49

 

50

 

​

51

 

52

 

​

​

​

For nine months ended September 30,

​

​

For the years ended December 31,

​

(in thousands)

​

​

2021

​

​

2020

​

​

2020

​

​

2019

​

Net Revenues

​

​

​

$

63,274,375

​

​

​

​

$

1,805,505

​

​

​

​

$

9,674,203

​

​

​

​

$

2,412,837

​

​

Total cost of revenues

​

​

​

​

61,882,619

​

​

​

​

​

1,720,515

​

​

​

​

​

9,138,767

​

​

​

​

​

2,311,365

​

​

Gross profit

​

​

​

​

1,391,756

​

​

​

​

​

84,990

​

​

​

​

​

535,436

​

​

​

​

​

101,472

​

​

Total operating expenses

​

​

​

​

261,368

​

​

​

​

​

42,478

​

​

​

​

​

72,001

​

​

​

​

​

77,286

​

​

Total other income

​

​

​

​

(9,003)

​

​

​

​

​

(562)

​

​

​

​

​

(14,880)

​

​

​

​

​

670

​

​

Net income

​

​

​

$

1,121,385

​

​

​

​

$

41,950

​

​

​

​

$

448,555

​

​

​

​

$

24,856

​

​

Net income attributable to Unit holders

​

​

​

​

965,255

​

​

​

​

​

36,422

​

​

​

​

​

295,170

​

​

​

​

​

25,031

​

​

Adjusted net income(1)

​

​

​

$

1,261,301

​

​

​

​

$

58,782

​

​

​

​

$

413,154

​

​

​

​

$

54,670

​

​

​

​

​

As of September 30,

​

​

As of December 31,

​

(in thousands)

​

​

2021

​

​

2020

​

​

2019

​

Cash

​

​

​

$

275,767

​

​

​

​

$

137,951

​

​

​

​

$

106,263

​

​

Digital assets

​

​

​

​

1,837,882

​

​

​

​

​

844,634

​

​

​

​

​

78,979

​

​

Other current assets

​

​

​

​

674,423

​

​

​

​

​

191,308

​

​

​

​

​

42,903

​

​

Non-current assets

​

​

​

​

845,792

​

​

​

​

​

293,603

​

​

​

​

​

167,275

​

​

Total assets

​

​

​

$

3,633,864

​

​

​

​

$

1,467,496

​

​

​

​

$

395,420

​

​

Total liabilities

​

​

​

​

1,480,811

​

​

​

​

​

478,447

​

​

​

​

​

47,855

​

​

Unit holders’ capital

​

​

​

​

1,682,303

​

​

​

​

​

703,093

​

​

​

​

​

340,246

​

​

Noncontrolling interests

​

​

​

​

470,750

​

​

​

​

​

285,956

​

​

​

​

​

7,319

​

​

Total liabilities and equity

​

​

​

$

3,633,864

​

​

​

​

$

1,467,496

​

​

​

​

$

395,420

​

​

Net digital assets(2)

​

​

​

$

516,460

​

​

​

​

$

452,490

​

​

​

​

$

63,700

​

​

Fair value adjustment

​

​

​

​

355,774

​

​

​

​

​

95,239

​

​

​

​

​

7,422

​

​

Net digital assets at fair value(2)

​

​

​

$

872,234

​

​

​

​

$

547,729

​

​

​

​

$

71,122

​

​

​

53

 

​

​

​

For the year ended December 31, 2020

​

​

Nine months ended September 30, 2021

​

​

​

​

Pro Forma for the Reorganization, the Reorganization Merger and the Exchangeable Notes Issuance

​

​

Pro Forma for the BitGo Acquisition

​

​

Pro Forma for the Reorganization, the Reorganization Merger and the Exchangeable Notes Issuance

​

​

Pro Forma for the BitGo Acquisition

​

​

​

​

(in thousands)

​

Revenues

​

​

​

$

9,674,203

​

​

​

​

$

7,685,780

​

​

​

​

$

63,274,375

​

​

​

​

$

63,832,812

​

​

Cost of revenues

​

​

​

​

9,138,767

​

​

​

​

​

9,235,602

​

​

​

​

​

61,882,619

​

​

​

​

​

64,802,292

​

​

Gross profit

​

​

​

​

535,436

​

​

​

​

​

(1,549,822)

​

​

​

​

​

1,391,756

​

​

​

​

​

(969,480)

​

​

Total operating expenses

​

​

​

​

72,001

​

​

​

​

​

166,812

​

​

​

​

​

261,368

​

​

​

​

​

325,439

​

​

Total other income

​

​

​

​

(32,005)

​

​

​

​

​

(32,005)

​

​

​

​

​

(21,847)

​

​

​

​

​

(21,847)

​

​

Income tax expense

​

​

​

​

(179)

​

​

​

​

​

(26,984)

​

​

​

​

​

58,532

​

​

​

​

​

59,411

​

​

Net income/(loss)

​

​

​

​

431,609

​

​

​

​

​

(1,721,655)

​

​

​

​

​

1,050,009

​

​

​

​

​

(1,376,177)

​

​

Net income/(loss) attributable to Common shareholders

​

​

​

$

82,489

​

​

​

​

$

(715,144)

​

​

​

​

$

268,122

​

​

​

​

$

(618,106)

​

​

54

 

55

 

56

 

57

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements under the captions “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and in other sections of this prospectus that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors.” You should specifically consider the numerous risks outlined under “Risk Factors.”

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

•

our future financial performance, including our expectations regarding and our ability to achieve and maintain future profitability;

​

•

our limited operating history, lack of experience implementing our business plan and our ability to effectively manage our growth;

​

•

anticipated trends, growth rates and challenges in our business, the cryptoeconomy and in the markets in which we operate;

​

•

our failure to adhere to complex and evolving governmental laws and regulations;

​

•

the continuing development and market acceptance of digital assets and distributed ledger technology;

​

•

the price of digital assets globally and the volume of transactions;

​

•

our dependence upon our Founder and the fact that we are controlled by our Founder;

​

•

increased expenses associated with being subject to the Exchange Act and other U.S. regulation and, if successfully consummated, with being a listed company on the Nasdaq;

​

•

our failure to maintain and grow our customer base;

​

•

our failure to continue to innovate and provide services that are useful to customers and achieve and maintain market acceptance;

​

•

the impact of acquisitions of or investments in complementary companies, products, services or technologies, including the BitGo Acquisition, and our ability to successfully integrate such companies or assets;

​

•

the effects of increased competition in our markets and our failure to compete effectively;

​

•

our revenue not growing at the rates they historically have, or at all;

​

•

our failure to successfully execute on our growth initiatives, business strategies, or operating plans;

​

•

the presentation of our financial statements in accordance with U.S. GAAP, and any future changes in U.S. GAAP or other accounting principles applicable to us;

​

•

incorrect estimates or judgments relating to our critical accounting policies;

​

•

our failure to comply with current and future federal and state privacy, security and data protection laws, regulations or standards;

​

 

58

 

•

inadequate investment in or maintenance of our operating platform and other information technology and business systems;

​

•

security breaches or incidents, loss or misuse of data, a failure in or breach of our operational or security systems or other disruptions;

​

•

disruptions in our disaster recovery systems or management continuity planning;

​

•

our ability to obtain, maintain, protect and enforce our intellectual property;

​

•

Pubco’s dependence on distributions from GDH LP to pay its taxes and expenses, including payments under the Tax Receivable Agreement and to fund dividend payments, if any;

​

•

our ability to realize any benefit from the Domestication or proposed organizational structure;

​

•

the COVID-19 pandemic; and

​

•

the other risk factors described under “Risk Factors.”

​

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this prospectus are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this prospectus, they may not be predictive of results or developments in future periods.

Any forward-looking statement speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.

 

59

 

RISK FACTORS

Ownership of our Class A common stock involves a high degree of risk. These risks include, but are not limited to, those described below, each of which may be relevant to an investment decision. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes. If any of the following risks or other risks actually occur, our business, financial condition, results of operations, and future prospects could be materially harmed. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Operations

We have limited operating history. Our business lines are nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and are not assured to be profitable.

We and our subsidiaries have limited operating history on which an investor might evaluate our performance. We began operations in 2018, and publicly introduced new products and services, including buying and selling of select cryptocurrencies (our “trading business”), managing capital on behalf of third parties (our “asset management” services), our financial, investment and strategic financial services (our “investment banking” and our “principal investments” businesses, as applicable) and our suite of products and services related to Bitcoin mining (our “mining” services) in 2020. As a result, we are therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues, any of which could have a material adverse effect on us and may force us to reduce or curtail operations. Due to our limited operating history, our business model has not been fully proven and we have limited financial data that can be used to evaluate our current business and future prospects, which subjects us to a number of uncertainties, including our ability to plan for, model and manage future growth and risks. Our historical revenue growth should not be considered indicative of our future performance. For example, our operating history has coincided with a period of general macroeconomic growth in the United States, and globally as well as growth in the financial services and other industries in which we operate. We therefore have not experienced any prolonged downturn or slowdown in macroeconomic or industry growth and cannot assure that we will be able to respond effectively to any such downturn or slowdown in the future. There is no assurance that we will be successful in achieving a return on stockholders’ investment and the likelihood of success must be considered in light of the early stage of operations. Even if we accomplish these objectives, we may not generate the anticipated positive cash flows or profits. No assurance can be given that we will ever be successful in our operations and operate profitably.

Furthermore, our business lines are nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and are not assured to be profitable. We may fail to be able to implement our investment or trading strategies, achieve our investment objectives, develop our business lines or produce a return for our investors. We have chosen to pursue a number of different businesses in this evolving industry. It is possible that some of these businesses may be difficult to enter and/or it may become evident that a particular business is not a productive use of capital or time. This could lead us to modify our businesses and focus. In particular, we may become involved in investments and projects that are not directly related to the digital asset or blockchain industry. These projects are likely to relate to industries and clients that we believe will benefit in the future from blockchain technology and our experience and network in digital assets industry.

From time to time, we may also launch new lines of business, offer new products and services within existing lines of business or undertake other strategic projects. There are substantial risks and uncertainties associated with these efforts and we would invest significant capital and resources in such efforts. Regulatory requirements can affect whether initiatives are able to be brought to market in a manner that is timely and attractive to our customers. Initial timetables for the development and introduction of new lines of business, products or services and price and profitability targets may not be met.

Furthermore, our revenues and costs may fluctuate due to start-up costs associated with new businesses or products and services while revenues may take time to develop, which may adversely impact our results of

 

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operations. If we are unable to successfully manage our business while reducing expenses, our ability to continue in business could depend on the ability to raise sufficient additional capital, obtain sufficient financing and monetizing assets. The occurrence of any of the foregoing risks would have a material adverse effect on our financial results, business and prospects.

Our operating results have and will significantly fluctuate due to a variety of factors, including the highly volatile nature of cryptocurrency.

Our leading sources of revenue are dependent on digital assets and the broader cryptoeconomy. Our operating results have and will significantly fluctuate due to a variety of factors, including the highly volatile nature of cryptocurrency. Significant positive or negative changes in cryptocurrency asset prices will not necessarily result in similar benefit or impairment to our operating results and financial condition. For example, the cumulative market capitalization of cryptocurrencies increased approximately 144% during the three months ended March 31, 2021, while the value of Unit holders’ capital increased 110% during the same period. Conversely, during the three months ended June 30, 2021, Unit holders’ capital decreased by 11%, while the cumulative market capitalization of cryptocurrencies decreased by 34%. Our operating results will continue to fluctuate significantly as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including:

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our dependence on offerings that are dependent on digital asset trading activity, including trading volume and the prevailing trading prices for digital assets, whose trading prices and volume can be highly volatile;

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our ability to attract, maintain, and grow our customer base and engage our customers;

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changes in the legislative or regulatory environment, or actions by governments or regulators, including fines, orders, or consent decrees;

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legislative or regulatory changes that impact our ability to offer certain products or services;

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the impact of environmental, social and governance concerns surrounding digital assets;

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pricing for our products and services;

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investments we make in the development of products and services as well as technology offered to our ecosystem partners, international expansion, and sales and marketing;

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our utilization of and dependence on centralized exchanges and over-the-counter markets that are approved primarily based on our diligence review;

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macroeconomic conditions, including decreased trading in global markets or decreased demand for financial services products generally;

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disputes with our customers or regulators, adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs;

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the development and introduction of existing and new products and services by us or our competitors;

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increases in operating expenses that we expect to incur to grow and expand our operations and to remain competitive;

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the timing and amount of non-cash expenses, such as stock-based compensation and asset impairment;

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system failure or outages, including with respect to third-party cryptocurrency networks, breaches of security or privacy or any inaccessibility of the third-party cryptocurrency networks due to our or third-party actions;

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changes in the overall tax rate for our business, changes in tax laws or judicial or regulatory interpretations of tax laws;

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changes in accounting standards, policies, guidance and interpretations or principles;

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changes in requirements imposed on us by regulators or by our counterparties, including net capital requirements imposed by the SEC and FINRA;

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our ability to attract and retain talent;

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our ability to compete with our competitors; and

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general economic conditions in either domestic or international markets, including the impact of the ongoing COVID-19 pandemic.

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As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term. In view of the rapidly evolving nature of our business and the cryptoeconomy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates. Our operating results in one or more future quarters may fall below the expectations of securities analysts and investors. As a result, the market price of our Class A common stock may increase or decrease significantly.

Our operating results are dependent on the prices of digital assets and volume of transactions that we conduct. If such price or volume declines, our business, operating results, and financial condition would be adversely affected.

Any declines in the volume of digital asset transactions, the price of digital assets, or market liquidity for digital assets generally may adversely affect our operating results. We have significant investments in digital assets. As of September 30, 2021, we held digital asset investments at a carrying value of $1.6 billion, or $516.5 million of net digital assets (which includes all digital assets categorized as assets on the statement of financial position, less all digital assets categorized as liabilities on the statement of financial position and assets that do not belong to Galaxy, and excludes stablecoins) and held $872.2 million of net digital assets at fair value. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—​Galaxy—Non-GAAP Financial Measures” for more information about net digital assets, net digital assets at the fair value and our other non-GAAP financial measures. In addition, Unitholders’ capital (excluding noncontrolling interests) was $1.7 billion as of such date. Changes in the value of investments and digital assets will generally have a significant impact on our results. Our operating results will be impacted by the revenues and profits we generate from the purchase, sale, and trading of digital assets. The price of digital assets and associated demand for buying, selling, and trading of digital assets have historically been subject to significant volatility. For instance, in 2017, the value of certain digital assets, including Bitcoin, experienced steep increases in value, followed by a steep decline in 2018. More recently, after recovering and reaching record highs in April 2021, the value of certain digital assets, including Bitcoin, fell by almost 50% by mid-May 2021. The price and trading volume of any digital asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. Such uncertainty and volatility depend on a number of factors, including:

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market conditions across the cryptoeconomy;

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changes in liquidity, volume, and trading activities;

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trading activities on cryptocurrency platforms worldwide, many of which may be unregulated, and may include manipulative activities;

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investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

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the speed and rate at which cryptocurrency is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all;

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decreased user and investor confidence in digital assets and cryptocurrency platforms;

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negative publicity and events relating to the cryptoeconomy;

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unpredictable social media coverage or “trending” of digital assets;

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the ability for digital assets to meet user and investor demands;

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the functionality and utility of digital assets and their associated ecosystems and networks, including digital assets designed for use in various applications;

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consumer preferences and perceived value of digital assets and digital asset markets;

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increased competition from other payment services or other digital assets that exhibit better speed, security, scalability, or other characteristics;

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regulatory or legislative changes and updates affecting the cryptoeconomy;

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the characterization of digital assets under the laws of various jurisdictions around the world;

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the maintenance, troubleshooting, and development of the blockchain networks underlying digital assets, including by miners, validators, and developers worldwide;

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the ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

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ongoing technological viability and security of digital assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability;

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fees and speed associated with processing digital asset transactions, including on the underlying blockchain networks and on cryptocurrency platforms;

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financial strength of market participants;

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the availability and cost of funding and capital;

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the liquidity of cryptocurrency platforms;

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interruptions in service from or failures of major cryptocurrency platforms;

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availability of an active derivatives market for various digital assets;

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availability of banking and payment services to support cryptocurrency-related projects;

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level of interest rates and inflation;

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monetary policies of governments, trade restrictions, and fiat currency devaluations; and

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national and international economic and political conditions.

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There is no assurance that any digital asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of digital assets or the demand for trading digital assets decline, our business, operating results, and financial condition would be adversely affected.

A determination that a digital asset is a “security” for purposes of the federal securities laws could adversely affect the value of that digital asset and potentially digital assets generally, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of the Class A common stock.

Depending on its characteristics, a digital asset may be considered a “security” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict. Public, though non-binding, statements by senior officials at the Securities and Exchange Commission (the “SEC”) indicate that the SEC does not consider Bitcoin or Ethereum to be securities, at least currently, and the SEC staff has provided informal assurances to a handful of promoters that their digital assets are not securities. On the other hand, the SEC has brought enforcement actions against the promoters of several other digital assets on the basis that the digital assets in question are securities. Moreover, in September 2021 testimony before the Senate Banking Committee, the chairman of the SEC stated that “only a small number” of digital assets are not securities. Beyond the public enforcement actions involving specific digital assets, the SEC has not yet publicly identified which specific digital assets it considers to be securities, although it is possible that the SEC could do so in the future in the context of enforcement actions or in public statements outside the enforcement context.

The SEC’s positions on the federal securities law status of particular digital assets are closely watched and can have dramatic effects, whether or not the SEC’s positions prevail in federal court. For example, in 2020 the SEC filed a complaint against the promoters of XRP alleging that they raised more than $1.3 billion through XRP sales that should have been registered under the federal securities laws, but were not. In the

 

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weeks following the filing of the SEC’s complaint, XRP’s market capitalization fell to less than $10 billion, which was less than half of its market capitalization in the days prior to the complaint. The SEC’s action against XRP’s promoters underscores the continuing uncertainty around which digital assets are securities.

Whether a digital asset is a security under the federal securities laws depends on whether it is included in the lists of instruments making up the definition of “security” in the Securities Act, the Exchange Act and the Investment Company Act of 1940, as amended (the “Investment Company Act”). Digital assets as such do not appear in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has typically analyzed whether a particular digital asset is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the Howey and Reves tests, respectively. For many digital assets, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular digital asset qualifying as a security under one or both of the Howey and Reves tests. Adding to the complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the relevant facts evolve.

Any enforcement action by the SEC or a state securities regulator, or a court decision or SEC announcement, asserting or finding that a particular digital asset is a security for purposes of the federal securities laws would be expected to have an immediate and material adverse impact on the trading value of that digital asset if it is then generally used or traded in the United States, and depending on the specific characteristics of the digital asset, could have adverse spillover effects on the trading values of other digital assets perceived to share similar characteristics that are also generally used or traded in the United States. This is because the business models behind most digital assets are incompatible with U.S. regulations applying to transactions in securities. If a digital asset is asserted or found to be a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets. For example, all transactions in such digital asset would have to be registered with the SEC and potentially state securities regulators, or conducted in accordance with exemptions from registration, which could severely limit its liquidity and usefulness. Moreover, the network on which such digital asset is utilized may be subject to regulation as a securities intermediary, which could effectively render the network impracticable for its existing purposes. In addition to materially and adversely affecting the trading value of the digital asset, any such consequences are likely to significantly impact the digital asset’s liquidity and market participants’ ability to convert the digital asset into U.S. dollars.

As described under “—A determination that a digital asset is a ‘security’ for purposes of the federal securities laws could have adverse regulatory consequences for us, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of the Class A common stock,” the determination that a digital asset is a security under the federal securities laws could also have adverse U.S. regulatory consequences for us. But even if there were no such adverse U.S. regulatory consequences, we may nevertheless decide to terminate our services relating to that digital asset and liquidate our holdings of that digital asset while we believe a liquid market still exists, which could result in us selling that digital asset at depressed prices.

For a discussion of the potential consequences of having engaged in a digital asset transaction in the United States or with U.S. clients and counterparties in which we did not, but in retrospect should have, treated the digital asset in question as a security, see “Information About Galaxy Digital—Government Regulation—United States—Securities Regulation Generally.”

To the extent we hold any digital asset that is impacted by an assertion or finding of securities status, our business, financial condition and results of operations would be adversely impacted, as they would to the extent we earn revenues from transacting or facilitating transactions in that digital asset. Depending on which digital assets are impacted, these adverse impacts could be material to us and to the market price of the Class A common stock.

A determination that a digital asset is a “security” for purposes of the federal securities laws could have adverse regulatory consequences for us, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of the Class A common stock.

In addition to the potential for adverse consequences to our business, financial condition and results of operations described under “—A determination that a digital asset is a ‘security’ for purposes of the federal

 

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securities laws could adversely affect the value of that digital asset and potentially digital assets generally, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of the Class A common stock,” the classification of a digital asset as a security under the federal securities laws has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, clearing and holding of such assets. Although we take these implications into account for those digital assets that we treat as securities for federal securities law purposes, for a digital asset that we previously treated as not being a security for federal securities law purposes, these implications could include the following, any of which could have adverse consequences to our business, financial condition and results of operations as well as the market price of the Class A common stock:

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Liability for participating in unregistered securities offerings.   In the United States, securities generally may not be offered or sold unless registered with the SEC or an exemption from registration is available. If a digital asset is determined to be a security and we offered or sold that digital asset without a valid exemption from SEC registration requirements, we could incur liability to purchasers as well as SEC monetary fines and other penalties, including restrictions on our ability to conduct business.

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Liability for acting as an unregistered broker-dealer, national securities exchange or clearing agency.   A person in the business of effecting transactions in securities in the United States is generally subject to registration with the SEC as a “broker” or “dealer.” A platform that brings together purchasers and sellers to trade securities in the United States is generally subject to registration as a national securities exchange, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system. A person that facilitates clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. If a digital asset is determined to be a security and we transacted in that digital asset in a manner implicating any of the foregoing SEC registration requirements without being so registered or without a valid registration exemption, we could incur SEC monetary fines and other penalties, including restrictions on our ability to conduct business.

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Liability for operating as an unregistered investment company.   A person in the business of investing in securities in the United States is subject to registration and regulation as an investment company under the Investment Company Act, unless a valid exemption from such registration applies. The laws and regulations applicable to registered investment companies, including limitations on debt and other forms of leverage, restrictions on transactions with affiliates and other limitations on business activities generally make it impractical for an operating company such as us. If one or more digital assets is determined to be a security and we had been relying on such digital assets as not being securities for Investment Company Act purposes, we could incur SEC monetary fines and other penalties, including restrictions on our ability to conduct business. In addition, counterparties to contracts to which we are party could seek to avoid their obligations under those contracts on grounds that contracts with illegally unregistered investment companies are unenforceable.

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Obligation to restructure our operations in order to avoid operating as an unregistered investment company.   We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act, If we determined that we risked becoming subject to registration as an investment company under the Investment Company Act, we would explore alternatives for avoiding this status, which may include disposing of digital asset securities, or one or more of our principal investments, or acquiring businesses or assets that are not securities, and we may be required to effect such dispositions or acquisitions under unfavorable market conditions. See “—Risks Related to Our Organizational Structure and the Pubco Class A Common Stock—If we are deemed to be an investment company under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.”

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Liability for acting as an unregistered investment adviser.   A person in the business of advising others, for compensation, with respect to securities in the United States or to U.S. clients is subject to registration and regulation as an investment adviser under the Advisers Act, unless a valid exemption from such registration applies. If a digital asset is determined to be a security and we advised clients as to that digital asset in a manner implicating Advisers Act registration requirements without being

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so registered or without a valid registration exemption, we could incur SEC monetary fines and other penalties, including restrictions on our ability to conduct business.

We may be able to take steps in order to bring our operations into compliance with the federal securities laws following a determination that one or more digital assets in which we transact are securities, but there is no guarantee that we would be able to take such actions as may be necessary to ensure that our future activities comply with applicable law, which could force us to discontinue some or all of our business activities. In general, any steps we are able to take in order to ensure future compliance with applicable laws would not insulate us from liability for past violations.

While the above description of adverse regulatory consequences focuses on the federal securities laws, the various U.S. states and jurisdictions outside the United States also intensively regulate securities transactions, and so a U.S. state’s or other jurisdiction’s determination that a particular digital asset is a security could have similarly adverse consequences to our business, financial condition and results of operations as well as the market price of the Class A common stock.

Our process for analyzing whether or not a particular digital asset is a security for purposes of the federal securities laws may not yield results that are consistent with subsequent determinations by the SEC or federal courts, or with similar determinations made by our competitors.

We have procedures designed to analyze whether each digital asset that we seek to transact in could be deemed to be a “security” under the federal securities laws. See “Information About Galaxy Digital—​Government Regulation—United States—Securities Regulation Generally.” However, because of the inherent uncertainties associated with such an analysis, we acknowledge that a particular digital asset that we transact in may in the future be found by the SEC or a federal court to be a security notwithstanding our prior conclusion; and such prior conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on the presence of a security. We recognize that the application of securities laws to the specific facts and circumstances of digital assets may be complex and subject to change. We continue to monitor the U.S. and global regulatory environment, and we expect our process to continuously evolve to take into account case law, facts, and developments in technology, as regulatory guidance evolves. See “Information About Galaxy Digital—Government Regulation” for more information.

Because of complexities in applying the federal securities laws to digital assets and the fact that different companies doing business in the digital asset industry take varying approaches to digital asset analyses, we expect that competitors may reach different conclusions from us on the securities-law status of a particular digital asset or digital asset category. Although we anticipate that these differences will narrow over time as the SEC and federal courts address the securities-law status of larger numbers of individual digital assets, until that occurs, where competitors conclude that they have the ability to transact in digital assets in ways that we do not permit because of these different conclusions, some competitors may have business and revenue opportunities that are not available to us.

We are highly dependent on our key personnel, including our Founder, which exposes stockholders to material and unpredictable “key man” risk.

We are highly dependent on the services of our senior management team, including members of our executive team, and other key employees and personnel across product, engineering, risk management, compliance and legal, finance and marketing. Because we operate in a relatively new industry that requires highly skilled and technical personnel, our future success is highly dependent on the talents and contributions of our senior management and other key personnel. The loss of any such key personnel could disrupt our operations and have a material adverse effect on our business.

In particular, we are highly dependent on the services of Michael Novogratz, our founder, CEO and, through his direct and indirect ownership, the largest beneficial owner of Pubco’s Class A common stock (after giving effect to the Reorganization and the Reorganization Merger) (our “Founder”), for conducting our businesses, implementing investment and trading strategies and establishing and maintaining relationships with key business counterparties. If the services of our Founder were to become unavailable for any reason including a voluntary decision by our Founder to no longer continue with the business, it would have a material adverse effect on our business and investment decisions, financial results and returns to our stockholders.

 

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Our Founder, other members of senior management or other key personnel could engage in activities outside of Galaxy or could quit Galaxy in favor of other pursuits. Neither our Founder nor any other key personnel are contractually required to continue to provide services to us. While all of our key personnel have entered into employment agreements with us which contain covenants that they will not compete with us and applicable laws may prevent such personnel from engaging in certain directly competitive activities to the extent that they are members of the Board, such laws will not guarantee to stockholders that such personnel will devote their full time, attention or efforts to us. For example, if our Founder were to cease to provide services to us, he could engage in other pursuits, which may relate to digital assets or investing, while remaining our largest and generally controlling owner, an outcome that may be unfavorable to stockholders. Our Founder may also continue to manage significant non-digital assets outside of us, which may consume some of his time, attention and efforts.

Our Founder’s public profile makes it more likely that we will attract material regulatory scrutiny, which would be costly and distracting regardless of whether we have engaged in any unlawful conduct.

Our Founder has been a vocal and visible proponent of digital assets, in some cases attracting controversy in connection with his views and statements as expressed on social media or otherwise. Further, due to our Founder’s public profile, his views, statements and conduct could be subject to scrutiny by both the public at large and governmental and regulatory bodies, which could adversely affect our business and our reputation. These considerations make it foreseeable that we could attract material regulatory scrutiny driven in part by the visibility of our Founder, irrespective of whether we have engaged in any unlawful conduct. Regulatory scrutiny may take the form of requests for information or responses, examinations, meetings or other types of interactions that may proceed to a formal enforcement action, suit, fine or other formal negative sanction, consume a material amount of management’s time, attention and efforts, lead to material spending on legal and other advisors or cause other negative consequences.

If we fail to develop, maintain and enhance our brand and reputation, our business operating results and financial condition may be adversely affected.

Our brand and reputation are key assets and a competitive advantage, and maintaining a strong brand and reputation will be an important factor in our success and our development of our business. Protecting and enhancing our brand depends largely on the success of our marketing efforts, ability to provide consistent, high-quality, and secure products, services, features, and support. Thus, maintaining, protecting, and enhancing our reputation is also important to our development plans and relationships with our partners and counterparties. Furthermore, we believe that the importance of our brand and reputation may increase as competition in both the financial services industry and the cryptoeconomy further intensifies. Our brand and reputation could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity, unexpected events, or actions by third parties. Unfavorable publicity regarding, for example, the quality of or changes to our products and services, litigation or regulatory activity, privacy practices, data security compromises or breaches, terms of service, employment matters, the use of our products, services, or supported crypto assets for illicit or objectionable ends, the actions of our clients or our customers, or the actions of other companies that provide similar services to ours, has in the past, and could in the future, adversely affect our reputation and our business.

We receive a high degree of media coverage in the cryptoeconomy and around the world. Additionally, because we are a founder-led company, actions by, or unfavorable publicity about our Founder, may adversely impact our brand and reputation. Such negative publicity also could have an adverse effect on the size and engagement of our customers and could result in decreased revenue, which could have an adverse effect on our business, operating results, and financial condition. Further, we may in the future, be the target of social media campaigns criticizing actual or perceived actions or inactions that are disfavored by our customers, employees, or society at-large, which campaigns could materially impact our customers’ decisions to engage with our products and services.

More broadly, because the digital asset and blockchain technology sectors are relatively nascent, public opinion is underdeveloped and will continue to evolve over time. For example, recently, there has been increased focus on the environmental, social and governance considerations regarding the use of electricity and other resources for digital asset mining operations. Public debate regarding the regulation of all facets of

 

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the digital asset sector will continue to take shape as regulators and lawmakers make their positions known. Unfavorable media coverage in relation to the cryptoeconomy, including the societal impact of digital assets and the infrastructure that supports them and/or the viability of any particular cryptocurrency, could have a cascading impact on digital assets as an investable asset class, or even the cryptoeconomy at large, and adversely impact our business, our operating results and the value of any investment in us.

If we fail to protect our brand image or reputation, we may experience material adverse effects to the size, demographics, engagement, and loyalty of our customers, resulting in decreased revenue. In addition, if securities analysts or investors perceive any media coverage of us to be negative, the price of our Class A common stock may be adversely affected. Any such negative publicity could have an adverse effect on the size, activity, and loyalty of our customers and result in a decrease in revenue, which could adversely affect our business, operating results, and financial condition.

If we are unable to successfully identify, hire and retain qualified individuals, we will not be able to implement our growth strategy successfully.

Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel and senior management. We currently depend on the continued services and performance of our key personnel, including our Founder. Our growth strategy is based, in part, on our ability to attract and retain highly qualified individuals. Competition presented by other firms may create difficulty for us in recruiting and retaining professionals of a caliber consistent with our business strategy. If we are unable to successfully identify hire, develop, motivate and retain qualified professionals, this failure could materially and adversely affect our investment and trading strategies, the value of our assets and the value of any investment in us. If one or more of our executive officers or key employees were unable or unwilling to continue their employment with us, we might not be able to replace them easily, in a timely manner, or at all. The risk that competitors or other companies may poach our talent increases as we continue to build our brands and become more well-known. Our key personnel have been, and may continue to be, subject to poaching efforts by our competitors and other fintech, internet and high-growth companies, including well-capitalized players in the digital asset space. The loss of key personnel, including members of management as well as key engineering, product development, marketing, and sales personnel, could disrupt our operations and have a material adverse effect on our business. The success of our brand also depends on the commitment of our key personnel to our mission. To the extent that any of our key personnel act in a way that does not align with our mission, our reputation could be materially adversely affected.

Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly skilled individuals across the globe, with the continued contributions of our senior management being especially critical to our success. Competition for well-qualified, highly skilled employees in our industry is intense and our continued ability to compete effectively depends, in part, upon our ability to attract and retain new employees. While we have established programs to attract new employees and provide incentives to retain existing employees, particularly our senior management, we cannot guarantee that we will be able to attract new employees or retain the services of our senior management or any other key employees in the future. Additionally, we believe that our culture and core values have been, and will continue to be, a key contributor to our success and our ability to foster the innovation, creativity and teamwork we believe we need to support our operations. If we fail to effectively manage our hiring needs and successfully integrate our new hires, or if we fail to effectively manage remote work arrangements resulting from COVID-19, our efficiency and ability to meet our forecasts and our ability to maintain our culture, employee morale, productivity and retention could suffer, and our business, financial condition and results of operations could be materially adversely affected.

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. We

 

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compete against a number of companies operating both within the United States and abroad, and both those that focus on traditional financial services and those that focus on crypto-based services. For our discrete business lines we face competition from the following sources:

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Trading. Our trading business competes with an international group of spot, prime, proprietary, and derivative OTC providers and exchanges, and our lending business in general competes with a variety of both traditional and non-traditional lenders.

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Asset Management. Our asset management business competes with other asset managers that provide passive and active exposure to digital assets and blockchain infrastructure companies in the ecosystem.

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Investment Banking. Our investment banking business competes with bulge bracket investment banks, middle market investment banks, fintech-focused boutiques, and crypto-focused boutiques.

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Mining. Our mining business competes with proprietary miners, public and non-public mining companies, and companies offering financial services and infrastructure for miners.

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Principal Investments. Our principal investments business competes with an international set of competitors that include crypto and blockchain venture firms, generalist venture capital firms with dedicated crypto funds.

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We believe our primary source of competition to date has been from companies, in particular those located outside the United States, who are either subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions or have interpreted the regulatory requirements to which they are subject in a manner that is different from our interpretation. Some of such companies’ business models rely on being unregulated or only regulated in a small number of lower compliance jurisdictions, whilst also offering their products in highly regulated jurisdictions, including the United States, without necessarily complying with the relevant regulatory requirements in such jurisdictions.

To date, due to limited enforcement by U.S. and foreign regulators, many of these competitors have been able to operate from offshore while offering large numbers of products and services to consumers, including in the United States, Europe, and other highly regulated jurisdictions, without complying with the relevant licensing and other requirements in these jurisdictions, and seemingly without penalty. Due to our regulated status in several jurisdictions and our commitment to legal and regulatory compliance, we have not been able to offer many popular products and services, including products and services that our unregulated or less regulated competitors are able to offer to a group that includes many of our customers, which may adversely impact our business, financial condition, and results of operations.

In recent years, our commitment to compliance and the attendant customer-facing requirements, including customer due diligence requirements, may have had a competitive impact on us as these unregulated or less compliance-focused competitors have attracted more business. We also have expended significant managerial, operational, and compliance costs to meet the legal and regulatory requirements applicable to us in the United States and other jurisdictions in which we operate, and expect to continue to incur significant costs to comply with these requirements, which these unregulated or less regulated competitors have not had to incur.

Additionally, due to the broad nature of our products and services, we also compete with, and expect additional competition from, traditional financial services companies. We also face competition from companies that may target a wider range of customers, including retail customers, which could result in such competitors gaining broader recognition and market acceptance relative to our institutional customer approach.

Many innovative start-up companies and larger companies have made, and continue to make, significant investments in research and development, and we expect these companies to continue to develop similar or superior products and technologies that compete with our products. Further, more traditional financial and non-financial services businesses may choose to offer crypto-based services in the future as the industry gains adoption. Our current and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources, or may otherwise have certain competitive advantages over us.

 

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If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

Due to the unregulated nature and lack of transparency surrounding the operations of digital asset exchanges, they may experience fraud, security failures or operational problems, which may adversely affect the value of digital assets traded on those exchanges and, consequently, our investments and our Class A common stock.

Digital asset exchanges on which digital assets trade are relatively new and, in some cases, unregulated. Furthermore, while some exchanges provide information regarding their ownership structure, management teams, private key management, hot/cold storage policies, capitalization, corporate practices and regulatory compliance, many other exchanges do not. A lack of transparency provided could result in us underestimating the risk of a potential loss in balances, which could include the loss of a material portion of the value of the digital assets we own or invest in on such exchanges. Digital asset exchanges do not appear to be subject to regulation in a similar manner as other regulated trading platforms, such as national securities exchanges or designated contract markets. As a result, the marketplace may lose confidence in the less transparent or unregulated exchanges, including prominent exchanges that handle a significant volume of trading in these assets.

Many digital asset exchanges are unlicensed, unregulated, operate without extensive supervision by governmental authorities, and do not provide the public with significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. In particular, those located outside the United States may be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions. As a result, trading activity on or reported by these digital asset exchanges is generally significantly less regulated than trading in regulated U.S. securities and commodities markets, and may reflect behavior that would be prohibited in regulated U.S. trading venues. Additionally, some of these non-U.S. exchanges offer customers high leverage and/or a small insurance fund, which could result in potential losses being socialized to customers and a reduction in the value of our assets on exchange.

We do not insure the digital assets that we hold. While our third-party custodians have indicated to us that they maintain insurance coverage that is intended to cover losses of the digital assets they custody on behalf of their clients to some extent, there can be no assurance that the loss of any digital asset is fully insured against, and we may have limited rights of legal recourse in the event of loss. Consequently, a loss may be suffered with respect to our digital assets that is not covered by insurance and for which no person is liable for damages.

For example, in 2019 there were reports claiming that 80-95% of Bitcoin trading volume on exchanges was falsified or non-economic in nature, with specific focus on unregulated exchanges located outside of the United States. Such reports may indicate that the Bitcoin exchange market is significantly smaller than expected and that the United States makes up a significantly larger percentage of such market than is commonly understood. Nonetheless, any actual or perceived false trading in exchanges, and any other fraudulent or manipulative acts and practices, could adversely affect the value of digital assets and/or negatively affect the market perception of such assets. Further, a number of digital asset exchanges, including certain exchanges with which we engage, do not obtain or perform comprehensive Services Organization Controls (“SOC”) 1 and SOC 2 evaluations of their systems on a regular basis, if at all. SOC 1 evaluations of a digital asset exchange assess whether transactions are properly secured and segregated, and that the information provided to traders and investors is complete, accurate and timely. SOC 2 evaluations assess the design and implementation of an exchange’s security, availability, and confidentiality controls. Moreover, there are two types of such SOC evaluations: type 1 evaluates the processes at a particular point in time, while type 2 evaluations can test that the system controls across both the exchange and its custody products, if applicable, have been operating effectively over a period of time. If digital asset exchanges do not perform SOC evaluations, we may be unable to confirm that such exchanges’ financial reporting is accurate or whether it has taken proper steps to secure its information technology infrastructure against internal and external threats, which could expose us to additional risks that may have been identified and remediated had such exchanges obtained or performed SOC evaluation. Engaging with such digital asset exchanges could materially impact our reputation and the actual or perceived security of our investments. Any

 

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engagement with digital asset exchanges that do not obtain or perform SOC examinations exposes us to greater risks than companies that engage solely with digital asset exchanges that maintain thorough SOC examination processes. As of September 30, 2021, we held approximately $1.2 billion in digital assets at exchanges or custodians that do not have systems or organization control reporting available. In addition, over the past several years, some exchanges have been closed due to fraud and manipulative activity, business failure or security breaches. In many of these instances, the customers of such exchanges were not compensated or made whole for the partial or complete losses of their account balances. While smaller exchanges are less likely to have the infrastructure and capitalization that make larger exchanges more stable, larger exchanges are more likely to be appealing targets for hackers and malware and may be more likely to be targets of regulatory enforcement action.

Negative perception, a lack of stability in these exchange markets, fraud or misconduct, and the temporary or permanent closure of such exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the digital asset marketplace in general and result in greater volatility in the price of digital assets. These potential consequences could materially and adversely affect our investment and trading strategies, the value of our assets and the value of any investment in us and, therefore, the market price of our Class A common stock.

In the event that our employees, contractors or any of our affiliates engage in misconduct or commit errors, it may materially adversely impact our business, operating results and our reputation.

Misconduct or error by our employees or our business partners could subject us to legal liability, financial losses, and regulatory sanctions and could seriously harm our reputation and negatively affect our business. Such misconduct could include engaging in improper or unauthorized transactions or activities, misappropriation of customer funds, insider trading and misappropriation of information, failing to supervise other employees or service providers, improperly using confidential information, as well as improper trading activity such as spoofing, layering, wash trading, manipulation and front-running.

The inappropriate and/or unauthorized use of social media platforms, including weblogs (or blogs), social media websites and other forms of internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons by our clients or employees could increase our costs, cause damage to our brand, lead to litigation or result in information leakage. In addition, negative or inaccurate posts or comments about us on any social networking platforms could damage our reputation, brand image and goodwill. Despite our efforts to clearly define our mission and strategy and accurately characterize our products and service offerings, our employees, contractors or affiliates may engage in activities either in their official capacity as members of the Galaxy ecosystem, or in their unofficial capacities, that are in conflict with or are incongruent with Galaxy’s values, positions or strategies. Any instance of such discontinuity could negatively impact our client and/or counterparty relationships, our reputation and the market price of our Class A common stock.

Employee or service provider errors, including mistakes in executing, recording, or processing transactions for customers, could expose us to the risk of material losses even if the errors are detected. Although we have implemented processes and procedures and provide trainings to our employees and service providers to reduce the likelihood of misconduct and error, these efforts may not be successful. There may be confusion among employees, business partners and service providers, particularly in a fast growth company like ours, with respect to compliance obligations, particularly including confidentiality, data access, trading, and conflicts.

Moreover, we frequently engage in a wide variety of transactions and maintain relationships with a significant number of projects in the cryptoeconomy and blockchain technology sector, their developers, members of their ecosystem, and investors. These transactions and relationships could create potential conflicts of interests in management decisions that we make. For instance, certain of our officers, directors, and employees may be active investors in crypto projects themselves, and may make investment decisions in respect of projects that they have personally invested in.

It is not always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. If we were found to have not met our regulatory oversight and compliance and other obligations, we could be subject to regulatory sanctions, financial penalties, and

 

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restrictions on our activities for failure to properly identify, monitor and respond to potentially problematic activity and seriously damage our reputation. Our employees, contractors, and agents could also commit errors that subject us to financial claims for negligence, as well as regulatory actions, or result in financial liability. Further, allegations by regulatory or criminal authorities of improper trading activities could affect our brand, reputation and credibility of our company may be adversely affected.

We or our subsidiaries and affiliates are and may continue to be subject to substantial litigation, including individual and class action lawsuits, and regulatory risks.

We may be party to lawsuits and legal proceedings in the ordinary course of business. These matters are often expensive and disruptive to normal business operations. We have been, currently are, and may from time to time face allegations, lawsuits, regulatory inquiries, actions, requests, audits or investigations including with regards to contractual disputes with our business partners and other service providers, disputes with our clients and customers, disputes with our employees, agents or affiliates and data privacy, data security, or intellectual property infringement disputes. As an enterprise whose material business lines include financial services, we or our subsidiaries and affiliates, depend to a significant extent on our relationships with our clients and counterparties and our reputation for integrity and high-caliber professional services. As a result, if a client is not satisfied with our services, a counterparty has a dispute or if there are allegations of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, or if there is negative publicity and press speculation about us, whether or not valid, our reputation may be harmed and may be more damaging to our businesses than to businesses in other non-financial industries.

We or our subsidiaries and affiliates could be the subject of inquiries, investigations, lawsuits and proceedings by counterparties, clients, other third parties and regulatory and other governmental agencies in the United States and abroad, which could lead to increased expenses and harm to our reputation, business, financial condition and the market price of our Class A common stock. Responding to inquiries, investigations, lawsuits and proceedings, regardless of the ultimate outcome of the matter, is time-consuming and expensive and can divert the attention of senior management. Adverse outcomes with respect to allegations, lawsuits, regulatory inquiries, audits, or investigations may result in significant settlement costs or judgments, penalties and fines, or require us to modify our services or require us to stop serving certain customers or geographies, any of which could negatively impact our business. The outcome of such proceedings, and the related expenses, may be difficult to predict or estimate until late in the proceedings, which may last a number of years and be costly for us to maintain.

The scope, determination, and impact of claims, lawsuits, government and regulatory investigations, enforcement actions, disputes, and proceedings to which we are subject cannot be predicted with certainty, and may result in:

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substantial payments to satisfy judgments, fines, or penalties;

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substantial outside counsel legal fees and costs;

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additional compliance and licensure requirements;

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the imposition of independent monitors or consultants;

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loss or non-renewal of existing licenses or authorizations, or prohibition from or delays in obtaining additional licenses or authorizations, required for our business;

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loss of productivity and high demands on employee time;

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criminal sanctions or consent decrees;

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termination of certain employees, including members of our executive team;

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barring of certain employees from participating in our business in whole or in part;

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orders that restrict our business or prevent us from offering certain products or services;

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changes to our business model and practices;

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delays to planned transactions, product launches or improvements; and

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damage to our brand and reputation.

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Certain of our subsidiaries are subject to periodic examination by regulatory authorities. If compliance failures or other violations are found during an examination, a regulatory agency could initiate actions and impose sanctions for violations, including, for example, regulatory agreements, cease and desist orders, civil monetary penalties or termination of a license and could lead to litigation by investors or clients, any of which could adversely impact us.

If we and/or any governmental agency believe that we have accepted capital contributions by, or are otherwise holding assets of, any person or entity that is acting directly or indirectly, in violation of U.S., international or other anti-money laundering laws, rules, regulations, treaties or other restrictions, or on behalf of any suspected terrorist or terrorist organization, suspected drug trafficker or senior foreign political figure(s) suspected in engaging in foreign corruption, we and/or such governmental agency may “freeze the assets” of such person or entity. We may also be required to report and remit or transfer those assets to a governmental agency.

Following the consummation of the Reorganization, we will also be subject to the risk of claims under applicable U.S. securities laws. Volatility in our stock price increases the risk of such claims. Actions against us could be brought by sizable classes of customers who may claim large monetary damages, even if the alleged per-customer harm is small or non-existent. Regardless of the outcome, any such matters can have an adverse impact, which may be material, on our business, operating results, or financial condition because of legal costs, diversion of management resources, reputational damage, and other factors.

If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our revenue, could decline, which could adversely impact our business, operating results, and financial condition.

Our industry, and the cryptoeconomy generally, has been characterized by many rapid, significant, and disruptive products and services in recent years. These include decentralized applications, DeFi, yield farming, staking, token wrapping, governance tokens, innovative programs to attract customers such as transaction fee mining programs, initiatives to attract traders such as trading competitions, airdrops and giveaways, staking reward programs, and novel cryptocurrency fundraising and distribution schemes, such as “initial exchange offerings.” We expect new services and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currently provide. We cannot predict the effects of new services and technologies on our business. However, our ability to grow our customer base and revenue will depend in part on our ability to innovate and create successful new products and services, both independently and in conjunction with third-parties. In particular, developing and incorporating new products and services into our business may require substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could fail to attract customers, generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our ability to adapt and compete with new products and services may be inhibited by regulatory requirements and general uncertainty in the law, constraints by our banking partners and payment processors, third-party intellectual property rights, or other factors. Moreover, we must continue to enhance our technical infrastructure and other technology offerings to remain competitive and maintain a platform that has the required functionality, performance, capacity, security, and speed to attract and retain customers. As a result, we expect to expend significant costs and expenses to develop and upgrade our technical infrastructure to meet the evolving needs of the industry. Our success will depend on our ability to develop and incorporate new offerings and adapt to technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our business and our ability to successfully compete, retain existing customers, and attract new customers may be adversely affected.

We are exposed to a concentration of assets in a particular asset class, which could increase volatility, investment and market risk.

We trade, invest and hold primarily digital assets and investments in the blockchain space and conduct related businesses. We may accumulate significant positions in, or otherwise have significant exposure to, a single digital asset or asset type. If we choose to invest in concentrated positions, we could increase the volatility

 

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of investment results over time and exacerbate the risk that a loss in any position would have a material and adverse effect on our investment and trading strategies, the value of our assets and the value of any investment in us.

We are exposed to significant market risk based on our positions in digital assets, securities, commodities and other assets. The prices or values of digital and non-digital assets in which we may invest or trade have been, and likely will continue to be, highly volatile. Sustained market declines and periods of significant market volatility may limit our ability to produce positive investment and trading results, and there can be no assurance that our strategies will be successful in the markets and assets in which we invest or trade.

Our business relies on third-party service providers and subjects us to risks that we may not be able to control or remediate.

Our operations could be interrupted if our third-party service providers experience operational or other systems difficulties, terminate their services or fail to comply with regulations. We outsource some of our operational activities and accordingly depend on relationships with many third-party service providers. Specifically, we rely on third parties for certain services, including, but not limited to, legal, accounting, financial operations, trade related activity, IT infrastructure and systems, trade reconciliation, and margin and collateral movement. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers. The failure of these systems, a cybersecurity breach involving any of our third-party service providers or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service. As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected. Should we be required to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.

We host our mining equipment at a third-party datacenter. The provider oversees maintenance, up-time and other important elements of mining productivity. There is a service agreement that guarantees hash rate performance and system up-time and contractual consequences if the host does not meet these requirements. To the extent that the host does not meet these requirements for extended periods of time, the revenue from this business could be less than anticipated. Additionally, to the extent power costs increase, it could affect the future profitability of the business.

Unexpected market disruptions may cause major losses for us.

We may incur major losses in the event of disrupted markets and other extraordinary events in which market behavior diverges significantly from historically recognized patterns. The risk of loss in such events may be compounded by the fact that in disrupted markets, many positions become illiquid, making it difficult or impossible to close out positions against which markets are moving. Market disruptions caused by unexpected political, military and terrorist events may from time to time cause dramatic losses for us. Any such disruptions and events may have a material and adverse effect on our investment and trading strategies and on any investment in us.

Operational risk may materially and adversely affect our performance and results and we may not be effective in mitigating any such risk.

Any issue or adverse circumstance surrounding our operational risks may have a material and adverse effect on our performance and results. Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes, people, systems or from external events. Our exposure to operational risk arises from routine processing errors, as well as extraordinary incidents, such as major systems failures or legal and regulatory matters. As we operate trading, lending, investment and other businesses that are

 

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reliant on both technology and human expertise and execution, we are exposed to material operational risk arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of our service providers, counterparties or other third parties, failed or inadequate processes and technology or system failures.

Digital asset transfers are typically not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer or theft of digital assets generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. Although we have processes and procedures in place to limit any such transfers, it is possible that, through computer or human error, or through theft or criminal action, our digital assets could be subject to these operations errors and transferred from our accounts in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. To the extent that our business lines expand to include trust companies, which could occur on a greater scale upon the consummation of the BitGo Acquisition, custody services will expose us to greater risk of loss from irreversible operational errors, such as collateral transferred from a custody account in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. Operational errors or significant operational delays could materially negatively impact our ability to conduct our business or service our clients, which could adversely affect results of operations due to potentially higher expenses and lower revenues, create liability for us or our clients or negatively impact our reputation. Recurring operational issues may raise concerns among regulators regarding our governance and control environment.

We seek to mitigate risk and has established policies and procedures and seeks to provide an operational environment for the types of risk to which it is subject, including operational risk, credit risk, market risk, counterparty risk, exchange risk and liquidity risk. However, there are inherent limitations to our current and future risk management strategies, including risks that it has not appropriately anticipated or identified. Accurate and timely enterprise-wide risk information is necessary to enhance management’s decision-making in times of crisis. If our risk management framework proves ineffective or if our enterprise-wide management information is incomplete or inaccurate, we could suffer unexpected losses, which could materially adversely affect our business, results of operations and financial condition.

Because our long-term success depends, in part, on our ability to expand our sales to customers outside the United States, our business is susceptible to risks associated with international operations.

We currently have subsidiaries and operations in jurisdictions such as the Cayman Islands, the United Kingdom, Hong Kong, Canada and Japan as well as the United States. We plan to enter into or increase our presence in additional markets around the world, and any inability or failure to adequately exploit opportunities for international expansion, may harm our business and our adversely affect our revenue. We have a limited operating history outside North America, and our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to particular challenges of supporting a rapidly growing business in an environment of diverse cultures, languages, customs, tax laws, legal systems, alternate dispute systems and regulatory systems. As we continue to expand our business and customer base outside the United States, we will be increasingly susceptible to risks associated with international operations. These risks and challenges include:

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difficulty establishing and managing international operations and the increased operations, travel, infrastructure and legal and compliance costs associated with locations in different countries or regions;

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the need to understand and comply with local laws, regulations and customs in multiple jurisdictions, including laws and regulations governing broker-dealer practices, some of which may be different from, or conflict with, those of other jurisdictions, and which might not permit us to operate our business or collect revenues in the same manner as we do in such other jurisdictions;

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our interpretations of local laws and regulations, which may be subject to challenge by local regulators;

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difficulties or delays in obtaining and/or maintaining the regulatory permissions, authorizations, licenses or consents that may be required to offer certain products in one or more international markets;

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difficulties in managing multiple regulatory relationships across different jurisdictions on complex legal and regulatory matters;

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if we were to engage in any merger or acquisition activity internationally, this is complex and would be new for us and subject to additional regulatory scrutiny;

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the need to vary products, pricing and margins to effectively compete in international markets;

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the need to adapt and localize products for specific countries, including obtaining rights to third-party intellectual property used in each country;

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increased competition from local providers of similar products and services;

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the challenge of positioning our products and services to meet a demand in the local market (also known as “product-market fit”);

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the ability to obtain, maintain, protect, defend and enforce intellectual property rights abroad;

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the need to offer customer support and other aspects of our offering (including websites, articles, blog posts and customer support documentation) in various languages;

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compliance with anti-bribery laws, such as the Foreign Corrupt Practices Act (the “FCPA”) and equivalent anti-bribery and anti-corruption requirements in local markets, by us, our employees and our business partners, and the potential for increased complexity due to the requirements on us as a group to follow multiple rule sets;

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complexity and other risks associated with current and future legal requirements in other countries, including laws, rules, regulations and other legal requirements related to cybersecurity and data privacy frameworks and labor and employment laws;

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the need to enter into new business partnerships with third-party service providers in order to provide products and services in the local market, which we may rely upon to be able to provide such products and services or to meet certain regulatory obligations;

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varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs and differences in technology service delivery in different countries;

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fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars;

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taxation of our international earnings and potentially adverse tax consequences due to requirements of or changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and

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political or social unrest or economic instability in a specific country or region in which we operate.

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We have limited experience with international regulatory environments and market practices, and we may not be able to penetrate or successfully operate in the markets we choose to enter. In addition, we may incur significant expenses as a result of our international expansion, and we may not be successful. We may launch products that lack local product-market fit, face local competition from pre-existing companies offering similar products and/or face limited brand recognition in certain parts of the world, any of which could lead to non-acceptance or delayed acceptance of our products and services by customers in new markets. Product adoption and growth rates may vary significantly across different markets. We are subject to income taxes and other taxes in the United States and other countries in which we transact or conduct business, and such laws and tax rates vary by jurisdiction. We are subject to review and audit by U.S. federal, state, local and foreign tax authorities. Such tax authorities may disagree with tax positions we take, and if any such tax authority were to successfully challenge any such position, our financial condition or results of operations could be materially and adversely affected. Our failure to successfully manage these risks, or any failure to quickly exploit any opportunity for international expansion] could harm our international operations in the markets we choose to enter and have an adverse effect on our business, financial condition and results of operations.

 

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Fluctuations in currency exchange rates could harm our operating results and financial condition.

Revenue generated and expenses incurred from our international operations are often denominated in the currencies of the local countries. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar can affect our revenue and operating results reflected in our U.S. dollar-denominated financial statements. Our financial results are also subject to changes in exchange rates that impact the settlement of transactions in non-local currencies. As a result, it could be more difficult to detect underlying trends in our business and operating results. To the extent that fluctuations in currency exchange rates cause our operating results to differ from expectations of investors, the market price of our Class A common stock could be adversely impacted. To date, we have not engaged in currency hedging activities to limit the risk of exchange fluctuations. Even if we use derivative instruments to hedge exposure to fluctuations in foreign currency exchange rates, the use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place, and may introduce additional risks if we are unable to structure effective hedges with such instruments.

Pandemics, such as the COVID-19 pandemic, and resulting impacts on the global economy may materially and adversely affect us.

We face risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt our operations and may materially and adversely affect our business and financial conditions. For example, in December 2019, a novel strain of the coronavirus COVID-19 emerged as a global pandemic. As a result, during the first quarter of 2020, global financial markets experienced a period of sharp decline and volatility due in large part to the real and perceived economic impact of the COVID-19 pandemic. The public health impact of the coronavirus, as well as the steps taken by governments and businesses around the world to combat its spread, have had, and will continue to have, an adverse impact on the global economy. The duration and severity of the COVID-19 pandemic is unknown, and the extent of the business disruption and financial impact depend on factors beyond our knowledge and control. Given the uncertainty around the duration and extent of the COVID-19 pandemic, including as a result of the emergence of new strains and variants of the coronavirus, we expect that the evolving COVID-19 pandemic will continue to impact our business, results of operations, and financial condition and liquidity. The extent to which a pandemic impacts our business, including our operations and market for our securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the outbreak.

During the global financial crisis of 2007 to 2008, various sectors of the global financial markets experienced an extended period of adverse conditions featuring market uncertainty, reduced liquidity, greater volatility, general widening of credit spreads and a lack of price transparency. To the extent that similar marketplace events were to occur in the future, either as a result of a pandemic or otherwise, these events may have an adverse impact on our investments. In addition, governments from time to time intervene, directly and by regulation in ways that are unpredictable during times of crisis. Such intervention is often intended to directly influence prices and may, together with other factors, cause all of such markets to move rapidly in the same direction.

We intend to continue to execute on our strategic plans and operational initiatives during the COVID-19 outbreak; however, the aforementioned uncertainties may result in delays or modifications to these plans and initiatives. Business activities could also be materially adversely impacted as the fundraising for asset management products and advisory transactions may be delayed during such situations and the delivery of mining equipment may be disrupted due to supply chain interruptions. In particular, a pandemic could materially and adversely impact our business including without limitation, employee health, workforce productivity, increased expenses and other factors that will depend on future developments beyond our control, which may have a material and adverse effect on our business, financial condition, results of operations and cash flows. Such adverse effect could be rapid and unexpected.

The ultimate extent of the impact of any epidemic, pandemic, or other health crisis on our business will depend on multiple factors that are highly uncertain and cannot be predicted, including its severity, location and duration, and actions taken to contain or prevent further its spread. Additionally, the COVID-19 outbreak could increase the magnitude of many of the other risks described in this prospectus, and may

 

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have other material adverse effects on our operations that we are not currently able to predict. If our business and the markets in which we operate experience a prolonged occurrence of adverse public health conditions, such as COVID-19, it could materially adversely affect our business, financial condition, and results of operations.

We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Natural disasters or other catastrophic events may also cause damage or disruption to our operations, international commerce, and the global economy, and could have an adverse effect on our business, operating results, and financial condition. Our business operations are subject to interruption by natural disasters, fire, power shortages, and other events beyond our control. Further, acts of terrorism, labor activism or unrest, and other geo-political unrest could cause disruptions in our business or the businesses of our partners or the economy as a whole. In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our platform, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results. We do not maintain insurance sufficient to compensate us for the potentially significant losses that could result from disruptions to our services. Additionally, all the aforementioned risks may be further increased if we do not implement a disaster recovery plan or our partners’ disaster recovery plans prove to be inadequate. To the extent natural disasters or other catastrophic events concurrently impact data centers or mining equipment that we rely on, our operations may be delayed and we may suffer losses, both financial and otherwise.

Risks Related to Our Business Lines

Managing different business lines could present conflicts of interest.

There are certain inherent and potential conflicts of interest in managing different business lines and the presence of any such conflict of interest could materially adversely affect our business, reputation, results of operations and financial condition. We seek to build a full service, institutional-quality financial services business through our business lines: trading, principal investments, asset management, mining and investment banking. To the extent the BitGo Acquisition is consummated, our business lines will be further expanded to include custody services. Subject to applicable regulatory approvals, we may also launch additional business lines from time to time. Due to the broad scope of our businesses, potential conflicts of interest include situations where our services to a particular client or our own investments or other interests conflict, or are perceived to conflict, with the interests of another client, as well as situations where one or more of our businesses have access to material non-public information that may not be shared with our other businesses and situations where we may be an investor or creditor of an entity with which we also have an advisory or other relationship. For example, our subsidiaries may provide corporate advisory services to companies that are also investee companies of GDAM or within our venture portfolio. In such circumstances, we may not be able to conduct transactions relating to investments in portfolio companies, for example, due to the inability of GDAM to use to material non-public information in buying or selling securities to us. Furthermore, the allocation of investment opportunities among us, our funds and our clients could also present conflicts of interest. Providing custody services upon the consummation of the BitGo Acquisition, if consummated, while managing other funds and accounts, can present certain conflicts of interest as those funds and accounts might have similar or different investment objectives or strategies as trust accounts, or otherwise hold, purchase or sell investments that are eligible to be held, purchased or sold by the trust accounts, or may take positions that are opposite in direction from those taken by the trust accounts. In managing these different conflicts, fiduciary duty obligations may require us to resolve conflicts in favor of clients over our company or other third parties. For example, GDAM may be engaged to provide advice to a client that is considering entering into a transaction with us, and may advise the client not to pursue the transaction with us, or otherwise in connection with a potential transaction provide advice to the client that would be adverse to us. Employees and executives, including our Founder, may also have conflicts of interest in allocating their time and activity between the business lines. While we manage conflicts of interest through a number of ways, appropriately identifying and dealing with conflicts of interest is complex and difficult, and our

 

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reputation could be damaged and the willingness of clients to enter into transactions with us may be affected if we fail, or appear to fail, to identify, disclose and deal appropriately with conflicts of interest. In addition, potential or perceived conflicts, or the failure to make appropriate disclosures to clients regarding such conflicts, could give rise to litigation or regulatory enforcement actions. A failure to appropriately identify and address potential conflicts of interest could adversely affect our businesses, results of operations and financial condition.

Changes in the value levels of the assets may cause our assets under management (“AUM”), revenue and earnings to decline.

Our asset management business, which is conducted through one or more subsidiaries, is primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees which are normally expressed as a percentage of returns to the client. Numerous factors, including price movements in the assets in the markets in which we manage assets, could cause:

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the value of AUM, or the returns that we realize on AUM, to decrease;

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the withdrawal of funds from any products offered by us in favor of products offered by competitors; or

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a decrease in the value of seed or co-investment capital or a decrease in the amount of such capital available to invest.

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The occurrence of any of these events may cause our AUM, revenue and earnings, if any, to decline and may negatively impact the success of our asset management business, results of operations and financial condition.

The asset management business is highly regulated and regulators may apply or interpret these regulations with respect to digital assets in novel and unexpected ways.

Asset management is a highly regulated business subject to numerous legal and regulatory requirements. These regulations are intended to protect customers whose assets are under management and, as such, may limit our ability to develop, expand or carry out our asset management business in the intended manner. We are guided in significant part by regulatory regimes that are not clear or are not yet developed. To the extent that there is any ambiguity as to whether an asset under management is a security, the applicability of many regulations to our asset management business will not be clear. Furthermore, we must address conflicts of interest, as well as the perception of conflicts of interest, between ourselves (including our other business lines) and our clients and funds. In particular, we are required to act in the best interest of our clients and funds, which may include allocating opportunities to our clients and funds rather than to our own principal business lines. In addition, regulators have substantial discretion in determining what is in the best interest of a client of a fund and have increased their scrutiny of potential conflicts as well as the disclosure of such conflicts to an asset manager’s clients. Appropriately dealing with conflicts of interest is complex and if we fail, or appear to fail, to deal appropriately with any of these conflicts of interest, we may face reputational damage, litigation, regulatory proceedings, or penalties, fines or sanctions, any of which may have a material and negative impact on our asset management business. In addition, to the extent that we are required to obtain client or investor consent in connection with any potential conflict, any failure or delay in obtaining such consent may have a material and negative impact on our ability to take advantage of certain business opportunities.

Increased competition may cause our AUM, revenue and earnings to decline.

The asset management industry is highly competitive and has relatively low barriers to entry. We currently expect that, as digital assets become more mainstream, additional competitors, potentially in large numbers, may begin providing asset management services with respect to digital assets. We compete based on a number of factors including: investment performance, the level of fees charged, the quality and diversity of services and products provided, name recognition and reputation, and the ability to develop new investment strategies and products to meet the changing needs of investors. In addition, the introduction of new technologies, as well as regulatory changes, may significantly alter the competitive landscape for investment managers in digital assets. This could lead to fee compression or require us to spend more to

 

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modify or adapt our product offerings to attract and retain customers and remain competitive with products and services offered by new competitors in the industry. Increased competition on the basis of any of these factors, including competition leading to fee reductions, may cause our AUM, revenue and earnings to decline and materially and negatively impact the success of our asset management business and affect our overall business, results of operations and financial condition.

Our principal investments business, including any associated lending activities, is subject to substantial risk.

Our investments may be very risky and highly speculative and our principal investments business is subject to substantial risk, including risks related to third-party investment managers, operational risk, conflicts of interests, asset performance and regulatory compliance, that, if realized, could result in significant damage to our business and operating results.

Moreover, our due diligence processes may fail to uncover all of the problems, liabilities or other challenges, including fraud, material deficiencies, regulatory or compliance issues in connection with our prospective portfolio companies or our third-party investment managers. This could result in an increased risk of unanticipated or unknown issues or liabilities including with respect to compliance and regulatory matters, and our mitigation strategies may not be effective. Further, our valuations and projections in connection with our prospective investments may be inaccurate, which could result in a loss of all or substantially all of our investments and could adversely impact our financial condition and our business.

We do not always take controlling equity positions in our portfolio companies. To the extent that we do not hold a controlling equity interest in a portfolio company, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity for the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company, and may therefore suffer a decrease in the value of our investments. Further, our portfolio companies may be highly leveraged.

We may co-invest with third parties, including parties related to our Founder, through joint ventures or other entities. Such investments may include risks in connection with such third-party involvement, including the possibility that a third-party co-venturer may have financial difficulties, may have interests or goals that are inconsistent with ours or may be in a position to take action in a manner contrary to our investment objectives. We and our subsidiaries have loaned money to other companies as part of the principal investment business. The return of principal of such loans will depend in large part on the creditworthiness and financial strength of the issuers of such loans. While we perform extensive due diligence on our investments, nonetheless defaults are possible. In the event of a default by a borrower underlying an investment, we might not receive payments to which we is entitled and thereby could experience a decline in the value of our investments in the borrower. In the case of loans that are secured by collateral, while we generally expect the value of the collateral to be greater than the value of such loans, the value of the collateral could actually be equal to or less than the value of such loans or could decline below the outstanding amount of such loans subsequent to the investment. This risk is heightened given that some portion of the collateral for these loans is expected to be digital assets, and thus subject to the volatility, liquidity and other risks detailed herein. Our ability to have access to the collateral could be limited by bankruptcy and other insolvency laws. Under certain circumstances, the collateral could be released with the consent of the lenders or pursuant to the terms of the underlying loan agreement with the borrower. There is no assurance that the liquidation of the collateral securing a loan would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal, or that the collateral could be readily liquidated. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business or instances where we exercise control over the borrower. As a result, we might not receive full payment on a secured loan investment to which we is entitled and thereby could experience a decline in the value of, or a loss on, the investment.

We are subject to risks in connection with our mining business, including risks associated with counterparties.

We primarily operate our mining business through our subsidiary GDM, which mines bitcoin directly and manages a full suite of bitcoin-mining focused products and services. In furtherance of these objectives,

 

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GDM has procured bitcoin mining machines to be utilized for proprietary operations, miner finance and resale. We and our subsidiaries such as GDM also intend to lease mining equipment, including ASICs hardware from third-party producers, to customers as part of our mining business. The success of this business will depend significantly on the creditworthiness and financial strength of the lessees of such equipment. While we intend to perform due diligence on prospective lessees, defaults under leases are possible. In the event of a default by a lessee under an equipment lease, whether as a result of a failure by the lessee to comply with the lease terms, equipment failure or otherwise, we might not receive payments which we otherwise expect or to which we are entitled, or may incur liability to the lessee, and thereby could experience a material adverse effect on our expected return under a lease. This risk is heightened given that some portion of the payments in respect of such leases may be cryptocurrency or other digital assets, and thus subject to the volatility, liquidity and other risks detailed elsewhere in these risk factors. Our ability to have access to collateral securing lease payments or otherwise could be limited by bankruptcy and other insolvency laws. Under certain circumstances, there is a risk that a court may deem an equipment lease to be a secured transaction. There is no assurance that the liquidation of the collateral securing a lease would satisfy the lessor’s obligations under the lease in the event non-payment or other non-compliance, or that any such collateral could be readily liquidated. As a result, we might not receive full payment on a lease to which we are entitled and thereby could experience a decline in the value of, or a loss with respect to, such lease. Mining equipment leased by us may be subject to significant risks, including risk of damage to mining equipment, that are not covered by insurance.

Due to the illiquid market for mining equipment, part of our competitive advantage has to do with our access to the supply of mining equipment from vendors all over the world. As such, we are susceptible to any disruptions in this supply chain, including but not limited to non-delivery of machines and risks associated with the jurisdiction that the vendor is located.

Additionally, as the technology evolves, we may seek to acquire and lease newer models of miners to remain competitive in the market. Over time, we replace those miners which are no longer functional with new miners purchased from third-party manufacturers, many of whom are based in China. As the mining equipment that we own and lease eventually becomes obsolete or degrades due to ordinary wear and tear from usage, or becomes lost or damaged due to factors outside of our control, miners will need to be repaired or replaced along with other equipment from time to time in order for our for us to stay competitive. This upgrading process requires substantial capital investment, and we may face challenges in doing so on a timely and cost-effective basis based on availability of new miners. If we are unable to obtain adequate numbers of new and replacement miners at scale, our mining business be unable to remain competitive.

Governments have limited or may limit the shipment of products in and out of their jurisdictions, which could negatively impact our ability to receive mining equipment from our suppliers. Our third-party manufacturers, suppliers, sub-contractors and customers have been and will continue to be disrupted by worker absenteeism, quarantines, restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our supply chain, shipments of parts for our existing miners, as well as any new miners we purchase, may be delayed. As our miners require repair or become obsolete and require replacement, our ability to obtain adequate replacements or repair parts from their manufacturer may therefore be hampered. Supply chain disruptions could therefore negatively impact our operations.

Further, digital asset mining operations can consume significant amounts of electricity, and recently, there has been increased focus on, and public debate surrounding, the negative environmental, social and governance considerations associated with such operations. For a more detailed discussion of these risks, see “— Regulatory changes or actions in foreign jurisdictions may affect our business or restrict the use of one or more digital assets, mining activity or the operation of their networks or the digital asset exchange market in a manner that adversely affects our business” and “— If regulators or public utilities take actions that restrict or otherwise impact mining activities, there may be a significant decline in such activities, which could adversely affect digital asset networks, our business and the market price of our Class A common stock,” in each case under the caption “— Risks Related to Regulation, Information Systems and Privacy Matters.”

 

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The digital asset mining industry has seen rapid growth and innovation, and is becoming increasingly competitive and GDM may be unable to compete effectively.

The digital asset mining industry has seen rapid growth and innovation, and GDM may be unable to compete effectively. GDM’s expenses may be greater than we anticipate, and our investments to make GDM more efficient or to gain digital asset mining market share may not outpace monetization efforts. Bitcoin miners and other necessary hardware are also subject to malfunction, technological obsolescence, the global supply chain and difficulty and cost in obtaining new hardware. Any major malfunction out of the typical range of downtime for normal maintenance and repair could cause a significant disruption in our ability to continue mining, which could result in lower yields and harm our digital asset mining market share. New miners can be costly and may be in short supply. There can be no assurances that the most efficient mining hardware will be readily available when we identify the need for it. We face competition in acquiring mining machines from major manufacturers and, at a given time, mining machines may only be available for pre-order months in advance. As a result of competition for the latest generation mining machines, or if we unexpectedly need to replace our mining machines due to a faulty shipment or other failure, we may not be able to secure replacement machines at reasonable costs on a timely basis.

GDM’s business strategy currently focuses entirely on mining bitcoin (as opposed to other digital assets), and our hardware is limited to mining using current “proof-of-work” protocols. There could be developments in proof of work protocols, or other competing validation methods or processes, that render such business strategy obsolete. Proof-of-stake is an alternative method of validating digital asset transactions. Proof-of-stake methodology does not rely on resource intensive calculations to validate transactions and create new blocks in a blockchain; instead, the validator of the next block is determined, sometimes randomly, based on a methodology in the blockchain software. Rewards, and sometimes penalties, are issued based on the amount of digital assets a user has “staked” in order to become a validator. Should bitcoin shift from a proof-of-work validation method to a proof-of-stake or other method, the transaction verification process (i.e., “mining” or “validating”) may render our mining business less competitive or less profitable. In addition, in the general course of our business outside of GDM, we participate in networks with proof-of-stake consensus algorithms, and we may earn rewards in the form of the native token of the network. Although we legally own the staked digital assets and can control their use, the value of any staked digital assets is subject to market volatility, and any such rewards we may earn as a validator could be offset by a loss in value of the staked digital assets.

In addition, the aggregate computing power of the global bitcoin network has generally grown over time and we expect it to continue to grow in the future. The barriers to entry for new bitcoin miners are relatively low, which can give rise to additional capacity from competing bitcoin miners. As the hash rate in the bitcoin network increases, the amount of bitcoin earned per unit of hash rate decreases. The bitcoin protocol responds to increasing total hash rate by increasing the “difficulty” of bitcoin mining. If this “difficulty” increases at a significantly higher rate, we would need to increase our hash rate at the same rate in order to maintain market share and generate equivalent block rewards. Therefore, in order to maintain or increase our market share, we may be required to make significant capital expenditures.

Any decrease in GDM’s effective market share would result in a reduction in our share of block rewards and transaction fees, which could adversely affect our financial performance and financial position.

We are not obligated to hedge our exposures, and, if we do, hedging transactions may be ineffective or reduce our overall performance.

We are not obligated to, and often times may not, hedge our exposures. However, from time to time, we may use a variety of financial instruments and derivatives, such as options, swaps, and forward contracts, for risk management purposes, including to: protect against possible changes in the market value of our investment or trading assets resulting from fluctuations in cryptocurrency markets or securities markets and changes in interest rates; protect our unrealized gains in the value of our investments or trading assets; facilitate the sale of any such assets; enhance or preserve returns, spreads or gains on any trade or investment; hedge the interest-rate or currency-exchange risk on any of our liabilities or assets; protect against any increase in the price of any assets that we anticipate purchasing at a later date; or to any other end that we deem appropriate. The success of any hedging activities by us will depend, in part, on our ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy

 

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and the performance of the assets being hedged. Since the characteristics of many assets change as markets change or time passes, the success of our hedging strategy will also be subject to our ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. In addition, while we may enter into hedging transactions to seek to reduce risk, such transactions may actually increase risk or result in a poorer overall performance for us than if we had not engaged in such hedging transactions.

We may fail to develop and execute successful investment or trading strategies.

The success of our investment and trading activities will depend on the ability of the investment team to identify overvalued and undervalued investment opportunities and to exploit price discrepancies. This process involves a high degree of uncertainty. No assurance can be given that we will be able to identify suitable or profitable investment opportunities in which to deploy our capital. The success of the trading activities also depends on our ability to remain competitive with other over-the-counter traders and liquidity providers. Competition in trading is based on price, offerings, level of service, technology, relationships and market intelligence. The success of investment activities depends on our ability to source deals and obtain favorable terms. Competition in investment activities is based on relationships, the ability to offer strategic advice to portfolio companies and reputation. The barrier to entry in each of these businesses is very low and competitors can easily and will likely provide similar services in the near future. The success of our investment and trading business could suffer if we are not able to remain competitive.

We may make, or otherwise be subject to, trade errors.

Errors may occur with respect to trades executed on our behalf. Trade errors can result from a variety of situations, including, for example, when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold. Trade errors frequently result in losses, which could be material. To the extent that an error is caused by a third party, we may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.

Our trading orders may not be timely executed.

Our investment and trading strategies depend on the ability to establish and maintain an overall market position in a combination of financial instruments. Our trading orders may not be executed in a timely and efficient manner because of various circumstances, including, for example, trading volume surges or systems failures attributable to us or our counterparties, brokers, dealers, agents or other service providers. In such an event, we might only be able to acquire or dispose of some, but not all, of the components of our positions, or if the overall positions were to need adjustments, we might not be able to make such adjustments. As a result, we would not be able to achieve our desired market position, which may result in a loss. In addition, we can be expected to rely heavily on electronic execution systems (and may rely on new systems and technology in the future), which may be subject to certain systemic limitations or mistakes, causing the interruption of trading orders made by us.

The success of our investment banking business will depend on our ability to generate and maintain ongoing, profitable client demand for our services and our ability to remain competitive in the digital asset investment banking space.

The success of our investment banking business, which is conducted through Galaxy Digital Partners LLC, depends on creating and sustaining a demand for our financial and strategic advisory services with respect to the digital asset, cryptocurrency and blockchain technology sector while maintaining favorable margins. The ability to realize and maintain this demand could be negatively affected by numerous factors, many of which will be beyond our control and unrelated to our future work product.

Developments in the digital asset industry, which are expected to be rapid, could shift demand to new services and solutions. If, as a result of new technologies or changes in the industries we serve, our clients demand new services that we do not or are unable to provide, we may be less competitive in these new areas or need to make significant investment to meet that demand. Our strategy for developing our investment banking business focuses on responding to these types of developments by driving innovation that will enable us to expand our investment banking business into new growth areas. If we do not sufficiently invest in

 

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new technology and adapt to industry developments or evolve and expand our business at sufficient speed and scale, the success or even the viability of our investment banking business would be negatively affected.

We may become involved in advisory projects that are not directly related to the digital asset or blockchain industry. These projects are likely to relate to industries and clients that we believe will benefit in the future from blockchain technology and our experience and network in digital assets industry, however there can be no assurance that any such projects are successful. Further, as our investment banking business continues to develop and evolve, especially with regards to our investments in companies operating within the digital asset industry and the blockchain technology sector generally, we could be subject to unintended or unforeseen regulatory oversight, or come into the purview of regulators who seek to target us for our role in such transactions, which could expose us to regulatory actions, which may be inconsistently applied across jurisdictions.

The success of our investment banking business may be significantly affected by our ability to price our services properly. If we are not able to obtain favorable pricing for our services, the success of our investment banking business may materially suffer. The rates we charge for our services may be affected by a number of factors, including: general economic and political conditions, the competitive environment in our industry and the procurement practices of clients and their use of third-party advisors. In particular, because Galaxy Digital Partners LLC is as a broker-dealer and advises on mergers and acquisitions, we may be unable to purchase errors and omissions insurance without incurring material costs to our business. Therefore, we may become subject to a securities class-action lawsuits in connection with our advice on a public merger or acquisition and be without recourse from insurance.

We believe that currently there are limited competitors providing the digital asset investment banking services that we provide. However, the barrier to entry is very low and competitors can easily and will increasingly compete with our offerings. As a result, the success of our investment banking business, results of operations and financial condition could suffer if we are not able to remain competitive. The less we are able to differentiate our services and solutions or clearly convey the value of our services and solutions, the more risks we will face in winning new work in sufficient volumes and at target pricing, which could materially negatively impact the success or viability of our advisory services business. In addition, the introduction of new services or products by competitors could reduce our ability to obtain favorable pricing and impact the overall economics for the services or solutions offered.

Our trading business and the various activities we undertake expose us to counterparty credit risk.

Credit risk is the risk that an issuer of a security or a counterparty will be unable or unwilling to satisfy payment or delivery obligations when due. In addition to the risk of an issuer of a security in which we invest failing or declining to perform on an obligation under the security, we are exposed to the risk that third parties, including trading counterparties, clearing agents, exchanges, clearinghouses, custodians, administrators and other financial intermediaries that may owe us money, securities or other assets will not perform their obligations. Any of these parties might default on their obligations to us because of bankruptcy, lack of liquidity, operational failure or other reasons, in which event we may lose all or substantially all of the value of any such investment or trading transaction. When we trade on exchanges that specialize in digital asset futures and derivatives, we are exposed to the credit risk of that exchange.

In the case of loans that are secured by collateral, while we generally expect the value of the collateral to be greater than the value of such loans, the value of the collateral could actually be equal to or less than the value of such loans or could decline below the outstanding amount of such loans. This risk is heightened given that some portion of the collateral for these loans is expected to be digital assets, and thus subject to the volatility, liquidity and other risks detailed herein. Our ability to have access to the collateral could be limited by bankruptcy and other insolvency laws. Under certain circumstances, the collateral could be released with the consent of the lenders or pursuant to the terms of the underlying loan agreement with the borrower. There is no assurance that the liquidation of the collateral securing a loan would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal, or that the collateral could be readily liquidated. As a result, we might not receive full payment on a secured loan investment to which we are entitled and thereby could experience a decline in the value of, or a loss on, the investment.

 

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In derivatives, we may invest in options on digital or non-digital assets. Purchasing and writing put and call options are highly specialized activities that entail greater-than-ordinary investment risks. An uncovered call writer’s loss is theoretically unlimited. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of over-the-counter options (options not traded on exchanges) are generally established through negotiation with the other party to the option contract. While this type of arrangement allows greater flexibility to tailor an option, over-the-counter options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. As of the date of this prospectus, the availability of exchange-traded and over-the-counter options on digital assets is extremely limited, so terms may be unfavorable in comparison to those available for more firmly established types of options.

The failure or bankruptcy of any of our clearing brokers (or futures commission merchants) could result in a substantial loss of our assets. Under the current regulations of the Commodity Futures Trading Commission, a clearing broker maintains customers’ assets in a bulk segregated account. If a clearing broker fails to do so or is unable to satisfy a substantial deficit in a customer account, its other customers may be subject to risk of loss of their funds in the event of that clearing broker’s bankruptcy. In such an event, the clearing broker’s customers, such as us, are entitled to recover, even in respect of property specifically traceable to them, only a proportional share of all property available for distribution to all of that clearing broker’s customers.

Risks Related to Cryptocurrencies and Digital Assets

The continuing development and acceptance of digital assets and distributed ledger technology are subject to a variety of risks.

Cryptocurrencies, such as Bitcoin, and the other types of digital assets in which we invest and trade involve a new and rapidly evolving industry of which blockchain technology is a prominent, but not unique, part. The growth of the digital asset industry in general, and distributed ledger technology that supports digital assets, is subject to a high degree of uncertainty. The factors affecting the further development of the digital asset industry, as well as distributed ledger technology, include:

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continued worldwide growth in the adoption and use of digital assets;

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the limited operating histories of many cryptocurrency networks, which have not been validated in production and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital assets and underlying blockchain networks;

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government and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operation of applicable distributed ledger technology or systems that facilitate their issuance and secondary trading;

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the taxation, and tax-related reporting, of transactions involving digital assets by the United States and other jurisdictions;

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the maintenance and development of the open-source software protocols of certain blockchain networks used to support digital assets;

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advancements in technology, including computing power, that may adversely affect the respective cryptocurrency networks, render existing distributed ledger technology obsolete, inefficient, or fail to remediate or introduce new bugs and security risks;

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the use of the networks supporting digital assets for developing smart contracts and distributed applications;

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development of new technologies for mining and the rewards and transaction fees for miners or validators on digital asset networks;

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changes in consumer demographics and public tastes and preferences;

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the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; and

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general economic conditions and the regulatory environment relating to digital assets.

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Many digital asset networks, including Bitcoin and Ethereum, operate on open-source protocols maintained by groups of core developers. The open-source structure of these network protocols means that certain core developers and other contributors may not be compensated, either directly or indirectly, for their contributions in maintaining and developing the network protocol. A failure to properly monitor and upgrade network protocol could damage digital asset networks. As these network protocols are not sold and their use does not generate revenues for development teams, core developers may not be directly compensated for maintaining and updating the network protocols. Consequently, developers may lack a financial incentive to maintain or develop the network, and the core developers may lack the resources to adequately address emerging issues with the networks. There can be no guarantee that developer support will continue or be sufficient in the future. To the extent that material issues arise with certain digital asset network protocols and the core developers and open-source contributors are unable or unwilling to address the issues adequately or in a timely manner, such digital asset networks, and any corresponding digital assets held may be adversely affected.

Digital assets represent a new and rapidly evolving industry, and the market price of our Class A common stock may be impacted by the acceptance of Bitcoin and other digital assets.

Crypto assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. The Bitcoin network was first launched in 2009 and Bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Because our results of operations and the market price of our Class A common stock may be closely correlated with the acceptance and perception of Bitcoin and/or other digital assets, the realization of one or more of the following risks could materially adversely affect the market price of our Class A common stock:

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Bitcoins have only recently become selectively accepted as a means of payment by some retail and commercial outlets, and use of Bitcoins by consumers to pay such retail and commercial outlets remains limited. Banks and other established financial institutions may refuse to process funds for Bitcoin transactions; process wire transfers to or from digital asset exchanges, Bitcoin-related companies or service providers; or maintain accounts for persons or entities transacting in Bitcoin. As a result, the prices of Bitcoins are largely determined by speculators and miners, thus contributing to price volatility that makes retailers less likely to accept it as a form of payment in the future.

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Banks may not provide banking services, or may cut off banking services, to businesses that provide digital asset-related services or that accept digital assets as payment, which could dampen liquidity in the market and damage the public perception of digital assets generally or any one digital asset in particular, such as Bitcoin, and their or its utility as a payment system, which could decrease the price of digital assets generally or individually.

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Certain privacy-preserving features have been or are expected to be introduced to some digital asset networks and exchanges or businesses that facilitate transactions in digital assets, including Bitcoin may be at an increased risk of having banking services cut off if there is a concern that these features interfere with the performance of anti-money laundering duties and economic sanctions checks.

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Users, developers and miners may otherwise switch to or adopt certain digital assets at the expense of their engagement with other digital asset networks, which may negatively impact those networks, including the Bitcoin network.

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In August 2017, the Bitcoin network underwent a hard fork that resulted in the creation of a new digital asset network called Bitcoin Cash. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the Bitcoin network. Any future hard fork could be similarly contentious and some users may attempt to negatively impact the use or adoption

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of the Bitcoin network or other digital asset networks, as may those involved in contentious hard forks of other digital assets.

Digital assets are a new asset class and represent a technological innovation and they are subject to a high degree of uncertainty. The adoption of digital assets will require growth in usage and in the blockchain technology generally for various applications. Adoption of digital assets will also require greater regulatory clarity. A lack of expansion in use of digital assets and blockchain technologies would adversely affect our financial performance. In addition, there is no assurance that digital assets generally will maintain their value over the long term. The value of digital assets is subject to risks related to our use. If growth in the use of digital assets generally occurs in the near or medium term, there is no assurance that such use will continue to grow over the long term. A contraction in use of digital assets may result in increased volatility or a reduction in digital asset prices, which would materially and adversely affect our investment and trading strategies, the value of our assets and the value of any investment in us.

The prices of digital assets are extraordinarily volatile.

Values of digital assets have historically been highly volatile. The value of cryptocurrencies is based in part on market adoption and future expectations, which may or may not be realized. Fluctuations in the price of various cryptocurrencies may cause uncertainty in the market and could negatively impact trading volumes of cryptocurrencies, which would adversely affect the success of our business, financial condition and results of operations. A decline in digital assets that we hold would negatively impact our financial position. A significant portion of demand for digital assets is generated by speculators and investors seeking to profit from the short- or long-term holding of these assets. Speculation regarding future appreciation in the value of a digital asset may inflate and make more volatile the price of that digital asset.

Several factors may affect the price of digital assets, particularly cryptocurrencies, including, but not limited to:

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Global cryptocurrency supply and demand, which can be influenced by the growth or decline of retail merchants’ and commercial businesses’ acceptance of cryptocurrencies as payment for goods and services, the security of online cryptocurrency exchanges and digital wallets that hold cryptocurrencies, the perception that the use and holding of digital currencies is safe and secure and regulatory restrictions on their use.

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Changes in the software, software requirements or hardware requirements underlying a blockchain network, such as a fork. Forks in the future are likely to occur and there is no assurance that such a fork would not result in a sustained decline in the market price of cryptocurrencies.

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Changes in the rights, obligations, incentives or rewards for the various participants in a blockchain network. For digital assets that rely on miners, sophisticated miner groups may become unduly influential over time if system or bandwidth requirements become too high. Where a single personality or entity exerts an outsize influence, an adverse event impacting that individual or entity, such as an insolvency proceeding, could result in a reduction in the price of a digital assets.

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Concentration of ownership in certain digital assets by an individual or small group of holders or those within one or a small number of jurisdictions. Large sales or distributions by such holders could have an adverse effect on the market price of such digital assets.

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The maintenance and development of the software protocol of cryptocurrencies.

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Cryptocurrency exchanges deposit and withdrawal policies and practices, liquidity on such exchanges and interruptions in service from or failures of such exchanges.

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Regulatory measures, if any, that affect the use and value of digital assets.

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The taxation, and tax-related reporting, of transactions involving digital assets by the United States and other jurisdictions.

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Competition for and among various cryptocurrencies that exist and market preferences and expectations with respect to adoption of individual currencies.

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Actual or perceived manipulation of the markets for cryptocurrencies.

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Actual or perceived threats that cryptocurrencies and related activities such as mining have adverse effects on the environment or are tied to illegal activities, or on the other hand, the correlation of the price of certain digital assets to the price of Bitcoin in particular.

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Social media posts and other public communications by high-profile individuals relating to specific cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to specific cryptocurrencies.

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Investors’ expectations with respect to the rate of inflation, in the economy, monetary policies of governments, trade restrictions and currency devaluations and revaluations.

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Additionally, some purportedly decentralized digital assets may be more centralized than widely believed, or may become more centralized over time, increasing the risk that an adverse event impacting an individual personality or entity could result in a reduction in the price of digital assets. While digital assets networks are typically decentralized and do not need to rely on any single government or institution to create, transmit and determine value, in reality a single personality or entity may have the ability to exert centralized authority over a network.

Some digital assets may be more difficult to value than other investments because such assets may not have a liquid or transparent trading market. We may not be able to sell a digital asset promptly or at a reasonable time or price. Although there may be an institutional market for certain digital assets, it is not possible to predict exactly how the market for such assets will develop or whether it will continue to exist. A digital asset that was liquid at the time of purchase may subsequently become illiquid, and its value may decline as a result. In addition, transaction costs are generally higher for digital assets.

There is no assurance that cryptocurrencies will maintain their long-term value in terms of purchasing power in the future, or that acceptance of cryptocurrency payments by mainstream retail merchants and commercial businesses will continue to grow. Only a limited number of cryptocurrencies, including Bitcoin, have become sometimes accepted as a means of payment for some goods and services, and use of cryptocurrencies by consumers to pay at retail and commercial outlets remains very limited. In part, this is because cryptocurrencies face significant scaling obstacles that can lead to high fees or slow transaction settlement times and attempts to increase the volume of transactions may not be effective. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such limited use as has developed to date, may result in increased volatility or a reduction in the value of that cryptocurrency or cryptocurrencies generally, either of which could materially and adversely affect our investment and trading strategies, the value of our assets and the value of any investment in us.

Many digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could adversely affect the price of our Class A common stock.

Digital asset transactions are typically not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer or theft of a digital asset generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. Although transfers of digital assets that we hold and/or that are custodied on behalf of our customers will regularly be made to or from our custody accounts, it is possible that, through computer or human error, or through theft or criminal action, such digital assets could be transferred from our custody accounts in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts.

Such events have occurred in connection with digital assets in the past. For example, in September 2014, the Digital Asset Exchange Huobi announced that it had sent approximately 900 Bitcoins and 8,000 Litecoins (worth approximately $400,000 at the prevailing market prices at the time) to the wrong customers. To the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third party which has received our digital assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred digital assets. We will also be unable to convert or recover the digital assets transferred to uncontrolled accounts. To the extent that we are unable to seek redress for such error or theft, such loss could have a material adverse effect on us.

 

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The U.S. federal income tax treatment of transactions in digital assets is unclear.

Due to the new and evolving nature of digital assets and the absence of comprehensive guidance with respect to digital assets, many significant aspects of the U.S. federal income tax treatment of digital assets are uncertain. Our operations and dealings, in or in connection with digital assets, as well as transactions in digital assets generally, could be subject to adverse tax consequences in the United States, including as a result of development of the legal regimes surrounding digital assets, and our operating results, as well as the price of digital assets, could be adversely affected thereby.

Many significant aspects of the U.S. federal income tax treatment of digital assets (including with respect to the amount, timing and character of income recognition) are uncertain. In 2014, the U.S. Internal Revenue Service (the “IRS”) released a notice (the “Notice”) discussing certain aspects of digital assets for U.S. federal income tax purposes and, in particular, stating that such digital assets (1) are “property,” ​(2) are not “currency” for purposes of the rules relating to foreign currency gain or loss and (3) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” ​(the “Ruling & FAQs”) that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital assets are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital assets. The Notice and the Ruling & FAQs, however, do not address other significant aspects of the U.S. federal income tax treatment of digital assets. We do not intend to request a ruling from the IRS on these issues, and we will take positions on these and other U.S. federal income tax issues relating to digital assets that we believe to be reasonable. There can be no assurance that the IRS will agree with the positions we take, and it is possible that the IRS will successfully challenge our positions.

There can be no assurance that the IRS will not alter its position with respect to digital assets in the future or that a court would uphold the treatment set forth in the Notice and the Ruling & FAQs. It is also unclear what additional guidance on the treatment of digital assets for U.S. federal income tax purposes may be issued in the future. Any such alteration of the current IRS positions or additional guidance could result in adverse tax consequences for us and could have an adverse effect on the value of Bitcoin or other digital assets. Because of the evolving nature of digital assets, it is not possible to predict potential future developments that may arise with respect to digital assets. Such developments may increase the uncertainty with respect to the treatment of digital assets for U.S. federal income tax purposes. For example, the Notice addresses only digital assets that are “convertible virtual currency,” and it is conceivable that we will hold certain types of digital assets that are not within the scope of the Notice. On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (the “IIJA”). The IIJA implements a set of comprehensive financial account information reporting rules that will apply to persons, including digital asset exchanges and custodians, that regularly effect transfers of digital assets on behalf of other persons. In particular, these rules will require digital asset exchanges and custodians to report digital asset transactions (including sales, exchanges and other transfers) effected on behalf of other persons on an annual return, in a manner similar to the current reporting rules for brokers that effect stock and other securities transactions on behalf of customers. These rules will be effective for digital asset transactions occurring after December 31, 2022. In addition, beginning in 2024, the IIJA extends the reporting requirements for businesses that receive more than $10,000 in cash in a transaction (or related transactions) to transactions involving the receipt of digital assets with a fair market value of more than $10,000. These rules, the effects of which may depend in significant part on regulation or other guidance from the IRS on their implementation, could create significant compliance burdens for us and our customers, and could affect the price of digital assets, which could have an adverse effect on our business.

The state, local and non-U.S. tax treatment of digital assets is unclear.

The taxing authorities of certain states (i) have announced that they will follow the Notice with respect to the treatment of digital assets for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital assets for fiat currency from state sales tax. It is unclear what further guidance on the treatment of digital assets for state tax purposes may be issued in the future. Any future guidance on the treatment of digital assets for state or local tax purposes could result in adverse tax consequences to us and could adversely affect the price of digital assets.

 

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