Crypto-focused financial services firm Galaxy Digital Holdings Ltd. finalized its acquisition of the digital asset custody platform GK8 Thursday for $44 million after winning an auction to buy the company from bankrupt crypto lender Celsius Network.
GK8 provides managed self-custody services for crypto assets, which allows the holders of cryptocurrency to retain sole possession of the keys to their wallets instead of entrusting them to a third party. Through GK8’s technology, the assets remain safely stored and accessible in its vaults, but institutional users maintain total control over their funds.
Using GK8’s cold wallet capabilities, users can safely store and transact using cryptocurrencies without connecting to the internet. The firm also provides a multiparty computation vault, which is an automated crypto storage method that operates by splitting access between multiple people who must sign a transaction before assets can be moved.
Galaxy intends to continue to support GK8’s operations in offering self-custody services independently. It will incorporate its solutions into its own ongoing development of GalaxyOne, a new prime brokerage offering for institutional investors. The GalaxyOne service will allow investors to combine trading, lending, cross-portfolio management and derivatives to be supported by custodial management of cryptocurrencies and include services from GK8.
Celsius Network, a crypto lender, filed for bankruptcy in July after it was caught up in the aftermath of the implosion of crypto exchange FTX Trading Ltd. The company put up several of its assets for sale, including GK8. The bankruptcy gave Galaxy the opportunity to purchase the crypto custody firm at a steep discount.
“The acquisition of GK8 is a crucial cornerstone in our effort to create a truly full-service financial platform for digital assets, ensuring our clients will have the option to store their digital assets at or separate from Galaxy without compromising versatility and functionality,” said Mike Novogratz, founder and chief executive of Galaxy.
Through the acquisition, Galaxy will add a team of nearly 40 people, including more cryptographers and blockchain engineers. Since GK8 is headquartered in Tel Aviv, Galaxy will also gain an office in the region and expand its global reach.
Galaxy intends to retain GK8’s founders, Chief Executive Lior Lamesh and Chief Technology Officer Shahar Shamai, who will lead Galaxy’s new custodial technology business arm.
“We’ve vigorously worked to become the most secure platform of choice for financial institutions participating in the digital asset ecosystem,” said Lamesh. “With the backing of Galaxy, we aim to introduce new and exciting offerings to the industry that showcase a combination of Galaxy’s best-in-class services and GK8’s cryptography, security and unparalleled R&D skills.”