Good morning, and welcome to Galaxy Digital's third quarter 2022 earnings call. Today's call is being recorded. At this time, I would like to turn the conference over to Elsa Ballard, Head of Investor Relations. Please proceed. Good morning, and welcome to Galaxy Digital's third quarter earnings call. Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Administrators on SEDAR, and available on our website or in future filings we make with other securities regulators. Forward-looking statements speak only as of today and will not be updated. In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy Digital or its affiliates to buy or sell any securities, including Galaxy Digital securities. With that, I'll turn it over to Mike Novogratz, Founder and CEO of Galaxy. Good morning, everyone. You know, we got a lot to cover today. It would seem strange not to start with the events of the last 72 hours. In some ways, this is the year where, you know, the bad news in crypto has just kept coming. It reminds me that this is a very young and new industry, and, you know, part of the growing pains is weeding out the bad actors, the excesses, and, you know, pivoting towards, you know, something that's more trusted. There's an irony, quite frankly, in that one of the reasons I got into crypto was transparency, was that crypto has the potential to make, financial markets far more transparent, far more efficient, and far more egalitarian. Yet, you know, we've had two, three, four episodes in the last 12 months that have really, you know, dented the momentum of this space. You know, it leaves me angry and frustrated but resolved that Galaxy has a role to play, and a very good role to play as a strong, transparent, smart, you know, risk managed, focused institution. Listen, we put out in the report today that we have $77 million of exposure at FTX. Of course, that doesn't make me happy. That said, our job is to provide liquidity to 850 different clients. We are trading on every major exchange or the major exchanges that we deem worthy of trading on. We have a credit committee that goes through. They meet all the time. In this case, we were already taking risks down Sunday night. By the time they, in essence, gated withdrawals, we'd gotten roughly half of our risk off the exchange and are left with, you know, being a hopeful yet cynical depositor or creditor. You don't expect this from, you know, an organization that was heralded as one of the good organizations that were close to regulators, that were close to some of the biggest investors in the world. You know, frustrating. I mean, the good news is it's 4% of our capital. It's 2% of our assets. While it stings, it's by no means that detrimental. I also, you know, like to prepare for the worst and hope for the best. It's way too early to completely understand what happened there. It's way too early to understand what recovery will be if we indeed get our capital back, or we end up getting some portion of it back. It does really, I think, hold our space in context for this year. I addressed the firm yesterday and I certainly was angry, but I was also optimistic, right? It gives Galaxy our lane to play, right? Why did we get into this business in the first place, right? Got in because I thought crypto would make a difference, as all our employees did, because Bitcoin as a store of value in a world where populist governments continues to print money is inevitable is inevitably going to succeed because blockchains are showing up all over the place. You can see Instagram now using the Polygon blockchain. You can see financial institutions moving into this space on a monthly and weekly basis. I'm more certain there's an inevitability that this space will grow. We are really laser-focused on our place in that. On the one hand, you know, competition is changing, the landscape completely changing. A lot of our competitors are blowing themselves to smithereens. We've lost lots of people in the credit business. It's BlockFi or Celsius, you know, Voyager, to name a few. That said, TradeFi institutions are moving into the space and/or preparing to move into the space. We're laser-focused on how we preserve our lead, right? That's domain expertise, staying on top of this business. It's risk management, it's relationships with those 850 trading accounts and the investment banking accounts and the asset management accounts, building trust. Listen, I think you come to work every day, you do that, and over time, we will survive this. There was an irony in that the macro environment was shifting and crypto was really starting to look good as of middle of last week. This is another setback. It will be a setback, right? There's going to be regulatory headaches galore, right? Sam Bankman-Fried spent more time than anyone in Washington. Regulators are going to take a new look at this. That's frustrating. Confidence in institutions. I'm not trying to be Pollyannish. I certainly think this makes the operating environment more challenging for the next period of time. I want to emphasize, I have not lost any of my medium and long-term belief that this space is inevitable. Let me see where I'm going here. Let me focus on a few things that we're going to do, that we have done and we're going to do to make sure Galaxy remains an important player in this ecosystem. One, you know, we looked at our cost, we looked at our headcount, and we made some adjustments. That was pre this FTX scenario, though I don't think we will change anything going forward. It was roughly 15% or 14% of headcount. Those are painful decisions. We love our employees. This was not performance-based. This was looking at what we thought the business could do over the next, you know, 12-18 months and where we wanted to invest. I would point out that we're increasing our investment in engineering and in security and in legal, expensive parts of the business, but we really think essential to build a company that will withstand what institutional investors want and what regulators want. Again, I feel it's always painful to let people go, but I think we've right-sized the ship and, you know, feel good about that. Listen, we also have an announcement. You know, Damien Vanderwilt, who has been our president for the last two years along with Chris Ferraro, at the end of the year is going to transition from running our global markets business to being a senior advisor working on strategy and joining the public company board. In lots of ways, Damien did his job. Since he came here, we hired a world-class COO in Erin, a CFO in Alex, a CTO, a CMO, and a chief security. I now look at the team, and we have a very strong senior management team in almost every bucket. I feel great about where the firm is in terms of management. We know our mission. In some ways, it's relatively simple. We're going to make a big bet on building a client-forward strategy in the sales and trading or the intermediation business, all centered around what we call GalaxyOne Prime or G1 Prime. I think and we think this is a must-win. We need to win this space. We've elevated one of our smartest guys in the firm to captain this mission. We've allocated 35 employees solely focused on building this out. Our treasurer, Tom Harrop, has now assumed the lending responsibilities, worked closely with his team, tried to get capital-efficient strategies for our clients. The offering integrates trading and lending and cross-portfolio margining, derivatives, alongside access to qualified custodians for institutional investors. There are other people working on Prime. We really think we are going to build the best in class, and we're making a big bet on that. Other than that, we are really going to focus on our asset management business. We've listened to what clients want. It's going to be a client-first-driven strategy. Because of that, we're making a bunch of strategic realignments to ensure we show up with the best product. We hired a young man named Mike Giampapa to join our venture team, and we'll shortly be moving our on-balance sheet venture, a team that's made over 107 portfolio investments in companies like Fireblocks, 1inch, Bullish Global. That team is going to move in asset management, where we'll allow outside investors to invest alongside the capital Galaxy has always put into that space. I think that's exciting. Hopefully, that group is in the first half of next year that we're in the market. We're going to focus on higher margin fee products. That said, we are going to retain our access products with regional partnerships. We're going to announce one very shortly in Latin America, and we are working really closely at inking deals in Europe and in Asia to help distribute our products. If I think about it on a go-forward basis, we're focused on Prime. We're focused on pivoting asset management. We still have a big mining operation. Listen, it's no surprise to anyone mining has been a tough environment this year. We are long-term believers in Bitcoin. We have a tax incentive, or a tax advantage, in mining Bitcoin. The mining business is relatively straightforward. If you get the cheapest electricity, a very efficient team, and buy your chips cheap, you win over mining over time. Even when hash rate goes real high, as those other factors make it more and more difficult, the low-cost producer wins. We have a long-term horizon on this. Traditionally, we were outsourcing our miners to other places. We always had a idea that we would vertically integrate this. Exciting that in January, we're gonna open our first, you know, wholly owned site in Texas. The plan is to, over time, transition all our mining to sites we own. We think that'll be a very good business for us in the medium to long run. All right. What else do we focus on? Our balance sheet. You know, our financial health, for us and for our investors is wildly important to us. In that, you know, the news is fairly good. At quarter end, we had over $1 billion of cash and $1.5 billion of liquidity. Our cash today, I just checked with our treasurer kind of coming into this space, is roughly the same. We have plenty of cash to prosecute what we're looking to do. Our stock, you know, trades unbelievably cheap. If you think about what our published, you know, quarter end book equity was roughly seven and a half dollars Canadian, and where our stock closed yesterday, it's almost a 40% discount to NAV, almost trading on top of the gross cash level. That's frustrating to all of us here, and I'm sure it's frustrating to you as investors. We are gonna try everything we can to change that. We did buy roughly $50 million worth of stock over the last, you know, four months, five months. The Canadian exchange has relatively specific rules of how much you can buy and when, and how much volume you can buy. You know, you can be assured that we certainly are thinking about our stock price, thinking about, you know, using our assets to drive it up because we just think the stock is woefully cheap. All right. Last but not least, what do I think the world looks like? If FTX hadn't happened, I was gonna tell you a story of increased narrative. If it was, you know, Fidelity launching a retail product or Instagram building their NFTs on a blockchain. All across the board, I was seeing more narratives. Elon Musk at one point using crypto in Twitter. That was getting people more and more excited. Bitcoin, Ethereum both were trading like they wanted to go higher. We were seeing more customer engagement, doing more trades, and we're positioned, you know, for a fall rally. It was kind of market sense that when the Fed flinches or when the Fed stops raising rates, and at one point they will, crypto was really gonna take the next leg up. That seemed to be a pretty good framework. This has put a short-term wrench in the works. I think we're gonna have to, you know, be nimble and agile for the next two-12 weeks as this digests and people really make sense of what happened. That said, this space has digested from Mt. Gox way back on blowups, scandals, bubble tops. There is a resilience to the crypto space that I've seen in almost no market that comes from the real belief that people have in the underlying mission. I'm confident that the macro will take back over. If I had a crystal ball, I'd tell you exactly when. But I would think within a quarter, we are back correlated to macro and we're not in event-driven space. I'll leave it at that. I think it's gonna be a challenging environment. I think Galaxy is well-heeled and well positioned to navigate it. We have a senior group of risk managers and of senior people that have been through the wars before. We'll leave it at that. Alex is now gonna kinda hit you on the financials. Thank you, Mike. Good morning. Our business performed well under market conditions that continue to be challenging. We ended the quarter with $1 billion in cash and $1.8 billion in equity capital. We reported a loss of $68 million for the third quarter, partially related to unrealized markdowns on our private investments. Due to difficult conditions for Bitcoin mining, in this quarter, we conservatively took a small impairment on our mining equipment. Reserve for a portion of receivables from mining counterparties. Both amounts were reflected in higher G&A expenses, but neither impairment was material. We continue to be bullish on Bitcoin mining and believe that this dislocation in mining provided opportunities to look for undervalued assets. Our total liquidity at the end of this quarter was $1.5 billion, consisting of $1 billion in cash, $187 million of net liquid digital assets, and $236 million of stablecoin, predominantly USDC issued by Circle and a small amount of Tether. I will now hand the call back to the operator for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Chase White with Compass Point. Please proceed. Thank you. Good morning, guys. A couple of questions, if I may. The first one's kind of high level, but in terms of the FTX news, I'm curious what you think the impact to your counterparty trading business and lending business could be. I mean, is this, you know, something that you think over the coming months and quarters where you'll see counterparties becoming a little more averse, especially to using leverage in general? Could this impact the interest rates you can charge as other shops try to compete for the remaining business out there? Just curious how you think about that, and then I have a follow-up. Thanks. Yeah. I would say in the short run, people will pull back. Everyone will be nervous until they see. You know, listen, we feel lucky in some ways that we're a public company, and we just published our financials. I just told you that we basically have the same cash position. We're not the same. We're not gonna tell you something that's not true. I do think over time, having a strong balance sheet and having relationships with people will allow that business to actually grow. I think in the short run, people are nervous. You know, the interesting thing is, you know, people need a place to deposit their crypto, and so there will be places. I think at one point, you know, you're gonna see the industry really push, and maybe force real transparency on these lenders. We haven't seen it. You know, you would have thought after Celsius, people would have demanded more. I think, you know, FTX and Sam, you know, had this halo, and so, you know, maybe people didn't, you know, push as hard as they should have. I don't know. You know, we'll see what comes out on that. It's unbelievably frustrating because it certainly isn't what you're used to in doing business. I feel immensely bad for all the people that have lost fortunes or at least have fortunes at risk right now. That's not the game people are in. You lose money when you make the wrong bet, not when somehow your deposits get whisked away. I do think the market's gonna push that way, and it'll take some time. I don't think the credit business is going away in crypto. I'll just add a couple things to what Mike said. I think from a risk perspective, we are laser focused on identifying and managing any potential second, third, fourth order exposure. That's counterparties who may themselves have counterparties who may have direct exposure to FTX, et cetera. We feel very good about where we sit in that equation and our risk management on that side. We don't have any concerns there. That's on the risk management side. On the go-forward business side, I largely agree with everything Mike said. We saw it happen earlier this year, with Three Arrows and the lending, the other lending platforms, and who themselves went out of business and had counterparties, market participants who were our customers and counterparties who also took pain. What we saw there was, as Mike said, short term, the market slowing down, after the dust settles. We've demonstrably started to win market share, albeit from a smaller pie. I would expect that same dynamic to happen where we continue to be in the market. We have capital, as we've told the world. Our business model is focused on servicing those clients. Albeit the pie will likely be smaller for a short period of time, we will continue to take market share today. as the pie grows, our share of that growth should be significantly larger than when we entered the year, to start before all this stuff happened. That's how we see it playing out. Great. That's very helpful. Thanks. And the second question is, you know, for the self-mining business, I mean, is there an opportunity out there to take advantage of the distress in the industry and pick up some mining data centers or mining rigs on the cheap in the coming months? Or even a possibility that you take ownership of collateral underpinning the equipment loans that could benefit you guys? Just curious how you think about that? Yep, I'll take this one. From a mining lending perspective, we have largely de minimis exposure. We said we did three small deals in the quarter. You can see that the total amount that we did aggregated to less than $8 million. Our position on lending against ASICs has largely been cautious for most of the year. From our side, on that side, like we will not be foreclosing on collateral opportunistically in any way in size because of that. We do see other players who took significantly larger exposures doing that, who will likely have issues in terms of collateral that they may or may not foreclose on and then what to do with it. We are very focused on secondary activity of ASICs, both from direct miners as well as lenders who will end up, at the end of the day, long that exposure. We are situated in a very good position to help provide liquidity at good values for that equipment. The other point you made, which we think is a very interesting one, which we are spending a lot of time on, is are there bigger, longer-lived, infrastructure assets that are available and would make sense for us to accelerate our plan to sort of vertically integrate? That is something that we have an entire team spending all of their waking hours on and have been for the last few months here. I can't point to anything specific yet, but know that we are very active in evaluating what's out there right now. Perfect. Thanks, guys. Appreciate the color. As a reminder, please limit yourself to one question so that management may answer all questions. The next question comes from Michael Legg with Benchmark. Please proceed. Thanks, good morning. Could you talk a little bit about what you're seeing in the private market versus what we're all seeing in the public market? You know, your venture portfolio seems to have gone down to 152 investments. I think we were over 200 previously. Just kinda wanna understand what you're seeing privately versus public and what's going on with the venture portfolio. Thanks. Sure. I'll take it. I think just to clarify, I think the number with the two handle you're referring to likely included both Galaxy Digital's balance sheet investments as well as investments that are in managed funds, including the interactive funds. The 152 is the 200. We haven't had a decrease in number of investments. What are we seeing there? We have seen still for most of this year a fairly stubbornly wide bid-ask spread in terms of valuation in the private markets on the ask side versus sort of public cryptocurrency prices, public equity prices, et cetera. We have continued to make new investments. I would say on average, those investments have been smaller in notional dollar amount, because we've leaned more earlier stage where we think value exists, significantly better than in companies who earlier in the year were further along the growth spectrum, and we're trying to hold on to what we now view as stale valuations from 2021. We've done a smaller number of deals at smaller dollars being deployed for that reason. It is starting to happen. What I mean it's starting to happen is, these companies who are doing great things and are building great product, in early stages eventually have runways and will go to look and raise, and raise capital. The capital available to invest in them has shrunk dramatically. Clearly, valuations both in the cryptocurrency markets and the public equity markets have come down dramatically across the board. There is always a lag in that market. You know, again, our positioning with the cash balances we have, the team that we've invested in who are focused on finding the best companies at the right valuations, we are best positioned right now for that, the private market to finally come our way after what has been truly years of really up and to the right and really lofty expectations. It is starting to happen. It is much slower than the public markets. All we've done is position ourselves with capital and talent to be able to take advantage of that opportunity. Okay, great. Thanks. Go ahead. As I said, one other thing I was gonna add, just to emphasize the point Mike made in the prepared remarks. Our intention going forward is to do that activity both with firm capital as investors in product, but really opening that product up to external investors. It's good for LPs in that they can get direct access to our assets and investment prowess. It's also great for shareholders of Galaxy because shareholders for Galaxy will still get the same kind of exposure that they have today in terms of direct access via our balance sheet, having likely seeded the existing portfolio as well as seeding new portfolios. Galaxy shareholders also in that regard are gonna get much more predictable management and incentive fee revenue streams that are high margin streams as we build out that franchise. I just want to emphasize the strategic shift that we've made that we're making as a company, as we think about our investing activity and how it manifests itself ultimately to shareholders. Great. Thanks. Just one quick follow-up. In Washington, you know, Sam Bankman-Fried's obviously been down there a lot. Could you talk a little bit about your efforts in Washington, like whether you're members of the Blockchain Association and what you're doing to get Galaxy's voice heard? Yeah. I was actually just down in D.C. probably six weeks ago, for two days and met with 13, 14 congressmen and senators. We have a full-time employee who grew up on the Hill, who seems to know everyone, Tyler Williams, and he's doing an amazing job for us. We also have Neil Kotchell, who's on our advisory board, who is very well plugged in, who can help guide Tyler. We are quietly engaged, as opposed to as publicly as some of our peers have been, trying to educate and help drive legislation. You know, we'll see. Assuming the Republicans actually take the House, which looked pretty certain this morning, I think the landscape's gonna shift there pretty quick. The new head of the Financial Services Committee is a crypto guy, and he is very focused. I think you're gonna see a much more aggressive Congress when it comes to the SEC, the CFTC, and the like. Great. Thank you. You're back in the queue. The next question comes from Deepak Kaushal with BMO Capital Markets. Hey, good morning, guys. Thanks for taking my questions. I'll try not to butcher what I'm trying to ask here. So, you know, given all this FTX stuff, you know, clearly there's a lack of transparency on the leverage, you know, the assets and collateral and the true value of some of these crypto assets in shallow markets, with not a lot of visibility on the trading volumes. How are you guys ensuring that when you make your own private investments, valuations aren't inflated by these low liquidity altcoins that aren't really truly equity? Well, let me take part of that, and Chris can answer if he wants. From a trading perspective, one of our screens is, you know, total value versus floating value, right? You know, is it a real price or not? If I'm gonna buy a coin or short a coin, that's a big input in it. From our venture side, we rarely, if almost ever, buy just coins. There's been one or two occasions where we bought coins and great projects at big discounts, because we were willing to lock them up. But most of the venture investments we make are early stage where you might get coins in addition to the equity you're investing in. I have been very skeptical since 2016 of high valuation, low float. I'll pick it up from here, and then you and Alex should probably jump in. A typical life cycle of a particular early-stage crypto investment where we make a small dollar investment in an early emerging pre-launch protocol would be, we would make an investment, and that investment would be held on balance sheet pretty much at cost for the longevity of that investment. As a new token launches, once there's an established market for that token, likely tokens that we own will have some locked-up vesting schedule where over time they get released, and we get liquidity along with other market participants. In that scenario, Deepak, we have a very robust and fairly aggressive, meaning conservative on the valuation side approach to discounting any mark-to-market on that investment for both the fact that our access to those tokens are limited because they're restricted, as well as the liquidity of those tokens in the market. While it varies based on how long the investment seasoned, how liquid the market is, to the extent we have tokens that are valued in the market, even though there's low liquidity, you will see oftentimes those being held in our balance sheet at discounts of 60%, 70%, 80%, 90% to where they are in the market. I mean, that's our internal processes for valuation that's validated by external valuation sources. It's validated by our auditors. That's how it ultimately manifests itself up on our balance sheet. Go ahead. That's right. When these tokens are fully free of restrictions, they end up in our digital assets. It's a fairly small portion of our net digital assets. Got it. When we look at the level one, two, and three classifications on your balance sheet, those are based on what a traditional financial services firm would use criteria, or are they based on a new set of criteria for the crypto world? No, it's based on the standard stuff and described in. Okay, that's helpful. My second question, if I may, on the U.S. listing process, maybe if you can give some color. I don't know if you covered this early in the call. I joined late. What are the kind of hurdle rates you're facing right now, obviously, aside from the midterm election issue? You know, we did get some accounting clarity from FASB on digital assets. Is that helpful? How does this improve your prospects for U.S. listing? It is helpful. FASB came out and said that they believe that digital assets should be mark to market, which is wonderful. However, we expect the adoption of those rules to take anywhere between nine and 18 months on the fast path. For now, we're still living under the current US GAAP interpretation. Right now, we're looking for a little bit of clarity from the SEC on one of the accounting interpretations in order to progress further with our filings. Okay, thanks for taking my question. Actively working on that. The next question comes from Rich Repetto with Piper Sandler. Yeah. Good morning, Michael, and sorry to ask you about all these macro questions. You know, at least I think you've been a commendable and credible representative of the crypto space, and you're the one that's got to explain all this now. Anyway, I guess my question is again around regulation and, you know, the industry has used the term lending, you know, in regards to these tokens. Doesn't this just play right into our friend at the SEC Chair Gensler's sort of assertion that it's more that this is more of a security. Like you say lending, there's some expectation that you're gonna pay back. These tokens, you know, I don't know whether there is that expectation or some expectation of vesting and ownership of the exchange. I guess the question is, you know, isn't this playing right into the hands of this securitization issue around tokens and then anything, you know, FTX US still out there, you know, does it have any chance of getting some of the things that it was trying to do, like this non-intermediary clearing into the U.S. now? Yeah, listen, it's a good question. You know, part of what happened with crypto is because there was not clarity from regulators and because it was a brand-new industry, people designed a lot of tokens, in essence, get around or play within the lack of transparency of the existing securities rules. A lot of these, like the FTT token for instance, it got you some utility. You could use it for discounted fees. You could use it for a few other things. There was a utility to it. It traded in the market like a proxy equity because they would burn a certain amount of the supply of the token, but it gave you no real right to the underlying cash flows of the company. I personally don't think that's the future. I think things that feel like security tokens will end up being security tokens once there's some more clarity from the regulators and that things will feel like utilities are utilities. You know, I think one of the things that we learned, if you think about, you know, why we had deposit insurance back in the thirties, is because you had a lot of people lost their money depositing money at banks and having the bank abscond it, you know. We've now had four examples of consumers depositing, you know, their crypto, their stable coins or their crypto coins at places and, you know, something happening where they thought they had put their crypto in a safe place, and it turned out not to be safe. that piece of the regulation people haven't spoken about, right? Are these non-bank banks, should they have, you know, some form of leverage limits? Should they be regulated? You know, my sense is it will head that way because I said this all the time when I would speak to crypto companies like, "We have to self-regulate or we're gonna be regulated." The community has done a pretty job, excuse the word, of self-regulating. This last example is, you know, it's infuriating, but it's just another example. I do think that piece of the business is gonna be looked at very closely. Thanks, Michael. It's not played in our hand. I mean, in some ways, you know, there's two other ways to think about it. Like, we wanna be a trusted intermediary. We think we've earned it. You know, our clients will tell us when we've really earned it. You know, you'll see our client base grow and our business grow. That's what we're striving for. The other piece of this, you know, in some ways the real irony of all these blowups is the companies that keep blowing up are companies that focus on crypto but are still centralized companies. You know, one of the futures, and it will be a shame if it gets, you know, set back too far or put in the dustbin is DeFi, right? Decentralized lending platforms, decentralized exchanges. What's stopping DeFi from really flourishing has been the KYC AML. Do we know who we're trading with? Do we know who we're lending to? There are lots of protocols being built. We've invested in one called Celo that are really aiming to automate that KYC process in a safe. Once that happens, and regulators understand that that's a good system, then I think you're gonna see the real explosion of the DeFi protocols. That's the real transformation where the industry gets disrupted. That's not coming anytime real soon, but that's where a lot of the smartest minds are building. What's coming sooner is you're gonna see more solid TradeFi players that operate in crypto. Thank you. Our next question comes from Jamie Friedman with Susquehanna. Hi. I wanna ask about Galaxy Asset Management. You say in the press release that you have adjusted to strategically focus on scaling active strategies. The assets under management grew sequentially quite significantly. Any context you could share about the active strategy and the underlying growth would be helpful. Thank you. Sure. In the quarter, we had both positive inflows outside of the active business in what we call sort of the passive business. Those would be our ETF partnerships and our single and multi-asset institutional funds. The bigger part of the growth was in subsequent closes to Interactive Fund Two, which is an actively managed venture fund that we sponsor. That is the asset management business for us on a go-forward basis, you know, we are focused on supporting the Interactive team and following them through to their final close on Interactive Fund Two. As we've articulated, we also believe there's a separate strategy and a great team and a long, successful track record here at Galaxy that should, rather than get monetized directly on our balance sheet, should get monetized through new Web3-focused venture product in our asset manager. That's the moving our investment, our opportunistic venture investment team off balance sheet into the asset manager, which should itself over time add significant AUM that includes higher management fee and higher incentive fee components rather than the relatively small management fees that come off of the passive business. Separately, we launched our Liquid Alpha Fund in the asset manager with Chris Rhine as the portfolio manager, who is a wildly talented PM. has been taking meetings with the largest institutional investors globally, throughout the large part of this year, is getting a lot of traction, and shows really well. You will see us take a lot of the. That follows the arc of what we've said we intend to do over time, frankly, as a business. A lot of the activity that Galaxy originally did on its balance sheet, and we've proven ourselves to do well over time, we are migrating into the asset manager to create stable, predictable revenue streams at high margins with significant management fees and significant incentive fees that should collect and stack on top of one another over time as we launch these products. Interactive is our first big main franchise. Liquid Alpha and other actively managed sort of mutual fund and hedge fund-like products you should expect to see on the liquid side. Additional illiquid active strategies in venture and other opportunistic funds should follow after that. Does that answer the question? Yeah, that's perfect. Thanks for the details, Chris. Appreciate it. I'll drop back in the queue. The next question comes from Hans Chung with D.A. Davidson. Good morning. Thank you for taking my question. I have a couple. First, I guess it's on Michael. So, just want to get your view on the potential direction of regulation after the FTX event. If we look back at the past six months, we see the meltdown of the Celsius, the Three Arrows Capital, and now FTX. Is there something in common like the human risk and then the centralized entity without the full transparency. To me, it seems like it really reinforce the very proposition of the decentralized blockchain, the technology or the crypto. On the other hand, the consumer investor got hit, and we also need the protection on consumer or investor, and that also draw the attention from the regulator. I was just curious, like, your view on the regulation based on your conversation, your engagement with all these regulators, how do you think the regulation will evolve, especially after the FTX event? Would that be more against the overall crypto, or do you think the regulator probably understand or realize what's the factor, like, driving all these, the bad event, so that they could become out something, like, more favorable to promote the blockchain? Yeah, listen, you know, it's hard to say. The process in D.C. has a life of its own, and the good news is that lots of both senators and congressmen have become very educated in the issues and nuance around what regulation is needed and how to start. There's a couple schools of thought, but I think it's gonna be a slow process. Until then, you're gonna see continued regulation through enforcement, right? I'm guessing the SEC and lots of regulators have sharpened their pencils in the last 24 hours to say, "Oh, God, we got another thing to look at." As plenty of people are gonna have lost money. You know, again, this is most of the trading was supposed to be, you know, with FTX is from overseas accounts. FTX US is a different thing, but there's, you know, plenty of slippage at times in that process. We'll see. What's painful about this is that Sam spent so much time in D.C. It wasn't that what he was saying was crazy. It's just if the messenger now looks like, you know, he ran his ship into an iceberg, and we'll see why, you know, why that happened. It's just going to anger the people he spent time with, and I think, you know, slow them down some. Got it. Okay. Next, can you help me understand from the near term and also long-term perspective, like what are key consideration to determine the allocation amount of treasury or working capital for trading or fund for lending or the fund for the principal investment, et cetera. Also how. Like, what's the factor to kind of determine how much the cryptocurrencies you want to hold versus cash or stablecoin? You know, we kinda see cash and at least USDC as interchangeable. You know, the stablecoins we invested are one-to-one backed stablecoins. It costs us a certain amount, right, to have money on exchanges to run our trading business. That varies on how comfortable we are with the environment, but it'll be $400 million-$600 million of money that's used at all the different venues to run all our liquidity business. Our credit business grows with opportunity. Some of that was funded with capital, and some of that was funded by, you know, taking other loans. You know, we continue to have one of the highest NIMs in the whole market. Our credit team's done a great job of finding good borrowers that we can feel comfortable about it, collateralized lending and being able to borrow cheaper, so not using all our balance sheet. There are opportunistic add-ons that we are looking at, you know, hopefully by the next call or two. We'll have spent some cash on buying things that we think are synergistic, but can't speak to that yet. Got it. Great. Thank you. Our next question comes from Kevin Dede with HCW. Hi, Mike, Chris. Thanks for taking the call. I was hoping you'd circle back a little bit on investment priorities. Mike, I did listen to your preface and discussion on the industry. I really appreciate that, but I was hoping that we could take a step back and look at strategic priorities in light of the recent market shakeup. Yeah. I would put them in a couple buckets. While we're building our prime business to be able to use multiple custodians, we still think there could be a role of having our own in-house custodian, both hot wallet and cold wallet. Looking at that space. In asset management, looking at available teams to come in and help build product out, right? We've got, you know, a lot of people, we have distribution, and so it's, and we're moving some of our best investors into the space, but other places to find product. As Chris alluded to, you know, in the mining space, if there are places to potentially build out our own data center slash mining in a vertically integrated way. That's kind of the three on the board right now. Okay. Clearly, there's been a changeup in valuations and, you know, this gets to Mike Legg's question. I was wondering if you wouldn't mind taking a step further and sort of charting how that disconnect between private and public valuations has migrated. Got it. whether you think you can take advantage of that nearer term versus, say, medium term? Certainly have gotten worse. You know, there are some companies that, you know, I flirted with that would have been great add-ons. Both guys there and myself and our team kind of said, "Oh, yeah, maybe they're a fourth of us, a third of us, or something of us," and they're raising capital that's 2x or 3 x us in the private market. You know, it puts in the short run until that, until we get our stock price up, and we will do a lot of, you know, we will try as hard as we can to do that and/or until the private valuations come down. It puts us trying to take anything bigger than a bite size, you know, private company into Galaxy off the table. Still stay in conversation with people that we wanna partner with, and there's other ways to partner with them. You know, we don't have that many levers to drive our stock. The Canadian market does not have a ton of volume right now and excitement around crypto. We bought as much as we could in the period we were allowed to. There are a few other you know, tricks in the bag that we're gonna be deploying. Most of it is just operating our business as well as we can, and hopefully like we are not in a position where we need to raise capital for the company at this point, luckily, because we don't wanna raise capital at you know, 50% of the book. We're being, you know, as prudent and thoughtful as we can in knowing that we have been keeping as much liquidity around. I know that's not a Great. That's not a great answer. Yeah, no. The insight is greatly appreciated. Even more so, I appreciate you fitting me in at the end of the call here, sir. Thank you. Last question. The next question comes from Kyle Voigt with KBW. Hey. Thank you for taking my question. Just a quick clarification point. I appreciate the disclosure regarding direct exposure to FTX specifically. Just wondering if you could provide any disclosure regarding if you have lending or borrowing balances to Alameda specifically. Thank you. Sure. Going into this and currently, we had zero exposure to Alameda. We had zero exposure to FTT as collateral in any way as part of our lending business. Our entire book generally is oversecured on an individual borrower basis. Any unsecured exposure we have is with the highest quality counterparty and is relatively de minimis to not just the lending book, but the lending book, let alone the whole firm. Zero exposures there across the board. FTX balances, as we articulated, is really the only direct exposure. It's down dramatically from where it could have been. Given our place in the market, that's. That in and of itself for the team was a heroic effort. Great. I appreciate you clarifying. Thank you. This concludes the question and answer session. I would now like to turn the conference back over to Mike Novogratz for any closing remarks. Guys, thanks for your interest. Like I said, you know, tough times in crypto land. We see this as an opportunity in the medium term. We are, you know, focused to come to work every day and do our best, trying to keep both enthusiasm and spirit at the company. You know, we're pretty optimistic that, you know, nine months from now we'll have a whole different tone on these calls. Thank you. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.