May 18, 2022. Michael Novogratz stared at his arm.
The tattoo of Terra Luna stared at him. This crescent tattoo cost him millions of dollars and nearly ruined his reputation. The price of Luna plummeted from $80 to zero in 72 hours, evaporating $60 billion, and the cryptocurrency world now refers to it as the "death spiral."
Most CEOs hire crisis management firms, blame market manipulation, or simply remain silent until the news cycle passes.
What about Novogratz? He sat down to write a letter.
"My tattoo will remind me at all times that venture capital requires humility," he wrote in the letter, detailing where things went wrong and what Galaxy Digital learned from one of the biggest disasters in cryptocurrency history. The letter was made public that afternoon.
When the bet fails, a standard strategy is usually adopted: to issue a carefully worded statement, shift the focus to "market conditions," and then wait for the headlines to subside. Novogratz did not do this. He wrote a letter.
He did not shirk responsibility, but instead detailed what happened with Terra, what was misjudged, and what he personally learned. In the financial sector, candor is not unheard of, but he turned it into a case study for the industry. While others might try to downplay the losses, he placed his own mistakes in the spotlight, inviting everyone to collectively document the lessons learned.
Novogratz has never been a typical Wall Street person. The former Goldman Sachs partner and Princeton wrestler built his career by viewing both victories and defeats as material for the next big move.
The collapse of Terra Luna is enough to end the careers of most cryptocurrency practitioners. For Novogratz, this is just another chapter in his story, which began on the wrestling mat, passed through currency trading floors, and now encompasses everything from Bitcoin advocacy to billion-dollar artificial intelligence data centers.
Personal Growth
November 26, 1964. Alexandria, Virginia.
Michael Novogratz was born into a family with seven children, being the third oldest. This family treated competition like other families treat vegetables: necessary, beneficial, and non-negotiable. His father played football at West Point, so the expectation of excellence was fundamental, at least to show convincing results.
At Fort Hunt High School, Novogratz discovered wrestling. It was not just a sport but a laboratory that taught him how to read his opponents, manage risks under pressure, and understand that preparation is more important than talent.
He won second place in the state competition and was subsequently recruited by Princeton University. Competing in Division I wrestling at the Ivy League means cutting weight, tactical preparation, and everything depends on individual performance. Nowograz serves as the captain of the Princeton University wrestling team and received honors as a first-team All-Ivy League selection in 1986 and 1987.
April 1, 1989. Goldman Sachs.
Novogratz joined Goldman Sachs as a short-term bond salesman, one of the hundreds of young recruits pouring in each year, all hoping to become partners. Most will fail within five years. A few will get rich. Even fewer will understand the bigger game rules.
What sets Novogratz apart is his timing and willingness to take on tasks that others may avoid. In 1992, Goldman Sachs sent him to Asia, where he experienced currency fluctuations, interest rate shocks, and ultimately witnessed the Asian financial crisis of 1997 over the next seven years. This experience allowed him to witness one of the most turbulent chapters of modern markets and made him one of Goldman Sachs' global macro experts.
His work experience in the currency and interest rate markets during this period made him one of Goldman Sachs' global macro experts when he was elected partner in 1998.
The partner status brings equity, profit sharing, and the authority to participate in internal investment opportunities within the company. More importantly, it positions him as one of the global macro experts as Goldman Sachs prepares to lead the financial markets in the next decade.
But Novogratz's climbing career is not over.
Fortress Empire and Its Fall
Fortress Investment Group.
Novogratz left Goldman Sachs to join one of the most representative alternative investment platforms of the 2000s. Fortress is expanding from private equity and credit to global macro, and they need someone who knows how to make money from currency chaos, interest rate fluctuations, and commodity supercycles.
At that time, central banks around the world actively managed exchange rates, emerging markets gradually opened up to international capital, and technology also gave rise to new ways of trading various commodities, from the Brazilian real to copper futures. Macro investment is entering a golden age.
Novogratz managed the Fortress Macro Fund, which grew its assets under management to $2.3 billion. The fund operated successfully for over a decade until the market environment changed after 2008.
February 2007. Fortress goes public.
The company became the first large alternative asset management firm in the United States to go public, briefly creating multiple billionaires on paper. Novogratz and his partners graced magazine covers and delivered keynote speeches at major conferences. For 18 months, they were the stars of the financial industry, riding the peak of the credit bubble.
Then, in 2008, it came like a meteorite impact.
The financial crisis fundamentally changed the environment for macro trading. Central banks began to coordinate policies more closely, monetary relationships changed in unexpected ways, and many market inefficiencies that macro funds exploited disappeared.
By 2013, Fortress Macro Fund was in trouble. The post-crisis era has been challenging for many macro strategies. Coordinated central bank policies have reduced the market volatility that macro traders rely on. Methods that have worked effectively for the past decade suddenly became completely ineffective.
October 2015. Announcement released.
Fortress will liquidate $2.3 billion in macro business. Novogratz will exit, and capital will be returned to investors. The industry-leading macro business built over thirteen years comes to an end with a press release and a series of final investor conference calls.
This closure may potentially end his career. However, Novogratz sees it as an education. The success of macro funds is built on identifying policy-driven market dislocations and exploiting them before others notice. Its failure reflects changing market conditions rather than mismanagement.
He needed this lesson earlier than he had anticipated.
Digital Gold Rush
New York, Fortress office.
Peter Briger, Co-CEO of Fortress Investment Group and former colleague at Goldman Sachs, called Novogratz and asked a life-changing question: "Bro, do you know about Bitcoin?"
The answer is to know nothing.
Novogratz had never heard of digital currency, blockchain technology, or cryptocurrency. Like most traditional finance professionals, he believes it is either a scam or a toy for programmers.
But after talking with friends in California, Brigg was convinced that Bitcoin represented something more important. They collaborated with Dan Morehead, a former executive at Tiger Management, who founded Pantera Capital, one of the first investment firms focused on cryptocurrency.
They made their first purchase when the price of Bitcoin was around $200. Initially, it was just another macro bet. If the digital currency succeeded, early adopters would profit. If it failed, they could also bear the losses.
This is a non-sovereign store of value that emerged during an unprecedented monetary expansion implemented by central banks. It provides exposure to technological disruption while hedging against currency depreciation.
By 2016, Novogratz had become one of the most prominent advocates of cryptocurrency, appearing on financial television to explain digital assets to institutional audiences who might overlook other cryptocurrency enthusiasts. His background at Goldman Sachs and macro investment experience gave him credibility among traditional investors, who were just beginning to view cryptocurrency as a legitimate asset class.
But advocating is not enough. He wants to create something.
January 9, 2018. Galaxy Digital officially announced ****. ****
Novogratz announced plans to build a comprehensive digital asset platform, combining trading, asset management, investment banking, and proprietary investments.
The vision is to become the Goldman Sachs of the cryptocurrency space, providing institutions with the same range of services as traditional investment banks, but focusing on the digital asset market.
By merging with a Canadian company, Galaxy Digital was able to go public in a regulatory framework for cryptocurrency businesses that was still unclear. On July 31, 2018, Galaxy completed a reverse acquisition and began trading on the TSX Venture Exchange under the code GLXY.
Galaxy Digital's business model differs from that of pure cryptocurrency companies. The company does not simply buy and hold digital assets; instead, it actively trades its treasury positions, using the profits from successful trades to fund operations and expansion. This approach is more flexible than a pure holding strategy but means that financial results partially depend on market timing and trading performance.
During the cryptocurrency bull market, this strategy performed exceptionally well. As Bitcoin and Ethereum appreciated, Galaxy's treasury operations generated hundreds of millions of dollars in profits. The company's venture capital in crypto infrastructure and applications created more value as the ecosystem matured.
But 2022 brought new challenges.
May 2022. The Terra Luna ecosystem collapsed within days, evaporating $60 billion in value and destroying one of the most coveted projects in the cryptocurrency space. When Luna's algorithmic stablecoin mechanism catastrophically failed, it faced financial losses and reputational damage.
Galaxy Digital invested in 18.5 million LUNA tokens at a price of $0.22 each back in 2020, and gradually sold them as the price increased. By April 2022, when LUNA peaked at $119, Galaxy Digital had made hundreds of millions in profit and had almost reduced its holdings to zero. When the algorithmic stablecoin mechanism ultimately failed, the direct financial risk was minimal: only about 2,000 LUNA tokens remained, worth less than ten dollars after the crash.
Novogratz did not hide from the mistake, but instead published a detailed explanation outlining where the problem lay and what lessons this incident provided. His CEO letter discussed risk management, due diligence processes, and the importance of distinguishing sustainable business models from experimental protocols in the cryptocurrency space.
He admitted that given the experimental nature of the project, his public support for Luna, including getting a tattoo of Luna, was premature.
This letter has become one of the most widely cited analyses following the Luna crash, as it honestly assesses that even experienced investors can make mistakes with emerging technologies.
Betting on Artificial Intelligence Infrastructure
New York, Galaxy Digital office.
As the cryptocurrency market recovers from the collapse of Terra Luna and FTX, Novogratz is already planning its next steps. The company announced a significant expansion into the artificial intelligence infrastructure sector, leveraging its experience in energy-intensive computing operations to enter the AI data center market.
Galaxy Digital has learned how to operate large-scale computing infrastructure through its cryptocurrency mining business. The skills optimized for Bitcoin mining can be applied to AI computing, potentially yielding higher profit margins and more predictable revenue streams.
In August 2024, Galaxy Digital secured a $1.4 billion project financing for its Helios data center campus in Texas. The facility will provide 800 megawatts of computing power for GPU cloud provider CoreWeave, having signed a 15-year contract that is expected to generate over $1 billion in revenue annually.
The Helios project aims to comprehensively develop an electricity capacity of up to 3.5 gigawatts, making it a major player in the supply-constrained artificial intelligence infrastructure market. This business model promises higher profit margins and more predictable revenues than cryptocurrency trading business.
The company maintains its existing cryptocurrency business while expanding into adjacent technology areas that leverage its current expertise.
Cryptocurrency has always been a blend of finance and drama. Few embody this as perfectly as Novogratz.
He is a storytelling trader and a trading storyteller. Luna's tattoos, candid letters, appearances on cable television. These are not just confessions or branding, but proof that the market is driven by both narrative and data.
The enterprises he established, whether it's Fortress's macro fund or the hybrid of Galaxy Digital combining trading, venture capital, and now artificial intelligence data centers, are all attempts to give form to a power greater than any individual. The volatility of currency, decentralized finance, and the computational demands of machine learning.
If he sometimes seems reckless, it is because he is taking risks in uncertain territories. And if he sometimes appears to have foresight, it is because these areas reward the few who act quickly, absorb losses, and can still double down on the next bet.
For Novogratz, the question has never been whether cryptocurrencies or artificial intelligence will fail. Because they cannot keep rising indefinitely. The question is who can build a resilient enough platform to withstand these failures. Amid all the chaos and drama surrounding him, this may become his most important contribution: providing the next generation of adventurers with a higher scaffold to stand on.
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Galaxy founder Michael Novogratz: Wall Street refugee
Author: Thejaswini, Source: Token Dispatch
Introduction
May 18, 2022. Michael Novogratz stared at his arm.
The tattoo of Terra Luna stared at him. This crescent tattoo cost him millions of dollars and nearly ruined his reputation. The price of Luna plummeted from $80 to zero in 72 hours, evaporating $60 billion, and the cryptocurrency world now refers to it as the "death spiral."
Most CEOs hire crisis management firms, blame market manipulation, or simply remain silent until the news cycle passes.
What about Novogratz? He sat down to write a letter.
"My tattoo will remind me at all times that venture capital requires humility," he wrote in the letter, detailing where things went wrong and what Galaxy Digital learned from one of the biggest disasters in cryptocurrency history. The letter was made public that afternoon.
When the bet fails, a standard strategy is usually adopted: to issue a carefully worded statement, shift the focus to "market conditions," and then wait for the headlines to subside. Novogratz did not do this. He wrote a letter.
He did not shirk responsibility, but instead detailed what happened with Terra, what was misjudged, and what he personally learned. In the financial sector, candor is not unheard of, but he turned it into a case study for the industry. While others might try to downplay the losses, he placed his own mistakes in the spotlight, inviting everyone to collectively document the lessons learned.
Novogratz has never been a typical Wall Street person. The former Goldman Sachs partner and Princeton wrestler built his career by viewing both victories and defeats as material for the next big move.
The collapse of Terra Luna is enough to end the careers of most cryptocurrency practitioners. For Novogratz, this is just another chapter in his story, which began on the wrestling mat, passed through currency trading floors, and now encompasses everything from Bitcoin advocacy to billion-dollar artificial intelligence data centers.
Personal Growth
November 26, 1964. Alexandria, Virginia.
Michael Novogratz was born into a family with seven children, being the third oldest. This family treated competition like other families treat vegetables: necessary, beneficial, and non-negotiable. His father played football at West Point, so the expectation of excellence was fundamental, at least to show convincing results.
At Fort Hunt High School, Novogratz discovered wrestling. It was not just a sport but a laboratory that taught him how to read his opponents, manage risks under pressure, and understand that preparation is more important than talent.
He won second place in the state competition and was subsequently recruited by Princeton University. Competing in Division I wrestling at the Ivy League means cutting weight, tactical preparation, and everything depends on individual performance. Nowograz serves as the captain of the Princeton University wrestling team and received honors as a first-team All-Ivy League selection in 1986 and 1987.
April 1, 1989. Goldman Sachs.
Novogratz joined Goldman Sachs as a short-term bond salesman, one of the hundreds of young recruits pouring in each year, all hoping to become partners. Most will fail within five years. A few will get rich. Even fewer will understand the bigger game rules.
What sets Novogratz apart is his timing and willingness to take on tasks that others may avoid. In 1992, Goldman Sachs sent him to Asia, where he experienced currency fluctuations, interest rate shocks, and ultimately witnessed the Asian financial crisis of 1997 over the next seven years. This experience allowed him to witness one of the most turbulent chapters of modern markets and made him one of Goldman Sachs' global macro experts.
His work experience in the currency and interest rate markets during this period made him one of Goldman Sachs' global macro experts when he was elected partner in 1998.
The partner status brings equity, profit sharing, and the authority to participate in internal investment opportunities within the company. More importantly, it positions him as one of the global macro experts as Goldman Sachs prepares to lead the financial markets in the next decade.
But Novogratz's climbing career is not over.
Fortress Empire and Its Fall
Novogratz left Goldman Sachs to join one of the most representative alternative investment platforms of the 2000s. Fortress is expanding from private equity and credit to global macro, and they need someone who knows how to make money from currency chaos, interest rate fluctuations, and commodity supercycles.
At that time, central banks around the world actively managed exchange rates, emerging markets gradually opened up to international capital, and technology also gave rise to new ways of trading various commodities, from the Brazilian real to copper futures. Macro investment is entering a golden age.
Novogratz managed the Fortress Macro Fund, which grew its assets under management to $2.3 billion. The fund operated successfully for over a decade until the market environment changed after 2008.
February 2007. Fortress goes public.
The company became the first large alternative asset management firm in the United States to go public, briefly creating multiple billionaires on paper. Novogratz and his partners graced magazine covers and delivered keynote speeches at major conferences. For 18 months, they were the stars of the financial industry, riding the peak of the credit bubble.
Then, in 2008, it came like a meteorite impact.
The financial crisis fundamentally changed the environment for macro trading. Central banks began to coordinate policies more closely, monetary relationships changed in unexpected ways, and many market inefficiencies that macro funds exploited disappeared.
By 2013, Fortress Macro Fund was in trouble. The post-crisis era has been challenging for many macro strategies. Coordinated central bank policies have reduced the market volatility that macro traders rely on. Methods that have worked effectively for the past decade suddenly became completely ineffective.
October 2015. Announcement released.
Fortress will liquidate $2.3 billion in macro business. Novogratz will exit, and capital will be returned to investors. The industry-leading macro business built over thirteen years comes to an end with a press release and a series of final investor conference calls.
This closure may potentially end his career. However, Novogratz sees it as an education. The success of macro funds is built on identifying policy-driven market dislocations and exploiting them before others notice. Its failure reflects changing market conditions rather than mismanagement.
He needed this lesson earlier than he had anticipated.
Digital Gold Rush
Peter Briger, Co-CEO of Fortress Investment Group and former colleague at Goldman Sachs, called Novogratz and asked a life-changing question: "Bro, do you know about Bitcoin?"
The answer is to know nothing.
Novogratz had never heard of digital currency, blockchain technology, or cryptocurrency. Like most traditional finance professionals, he believes it is either a scam or a toy for programmers.
But after talking with friends in California, Brigg was convinced that Bitcoin represented something more important. They collaborated with Dan Morehead, a former executive at Tiger Management, who founded Pantera Capital, one of the first investment firms focused on cryptocurrency.
They made their first purchase when the price of Bitcoin was around $200. Initially, it was just another macro bet. If the digital currency succeeded, early adopters would profit. If it failed, they could also bear the losses.
This is a non-sovereign store of value that emerged during an unprecedented monetary expansion implemented by central banks. It provides exposure to technological disruption while hedging against currency depreciation.
By 2016, Novogratz had become one of the most prominent advocates of cryptocurrency, appearing on financial television to explain digital assets to institutional audiences who might overlook other cryptocurrency enthusiasts. His background at Goldman Sachs and macro investment experience gave him credibility among traditional investors, who were just beginning to view cryptocurrency as a legitimate asset class.
But advocating is not enough. He wants to create something.
January 9, 2018. Galaxy Digital officially announced ****. ****
Novogratz announced plans to build a comprehensive digital asset platform, combining trading, asset management, investment banking, and proprietary investments.
The vision is to become the Goldman Sachs of the cryptocurrency space, providing institutions with the same range of services as traditional investment banks, but focusing on the digital asset market.
By merging with a Canadian company, Galaxy Digital was able to go public in a regulatory framework for cryptocurrency businesses that was still unclear. On July 31, 2018, Galaxy completed a reverse acquisition and began trading on the TSX Venture Exchange under the code GLXY.
Galaxy Digital's business model differs from that of pure cryptocurrency companies. The company does not simply buy and hold digital assets; instead, it actively trades its treasury positions, using the profits from successful trades to fund operations and expansion. This approach is more flexible than a pure holding strategy but means that financial results partially depend on market timing and trading performance.
During the cryptocurrency bull market, this strategy performed exceptionally well. As Bitcoin and Ethereum appreciated, Galaxy's treasury operations generated hundreds of millions of dollars in profits. The company's venture capital in crypto infrastructure and applications created more value as the ecosystem matured.
But 2022 brought new challenges.
May 2022. The Terra Luna ecosystem collapsed within days, evaporating $60 billion in value and destroying one of the most coveted projects in the cryptocurrency space. When Luna's algorithmic stablecoin mechanism catastrophically failed, it faced financial losses and reputational damage.
Galaxy Digital invested in 18.5 million LUNA tokens at a price of $0.22 each back in 2020, and gradually sold them as the price increased. By April 2022, when LUNA peaked at $119, Galaxy Digital had made hundreds of millions in profit and had almost reduced its holdings to zero. When the algorithmic stablecoin mechanism ultimately failed, the direct financial risk was minimal: only about 2,000 LUNA tokens remained, worth less than ten dollars after the crash.
Novogratz did not hide from the mistake, but instead published a detailed explanation outlining where the problem lay and what lessons this incident provided. His CEO letter discussed risk management, due diligence processes, and the importance of distinguishing sustainable business models from experimental protocols in the cryptocurrency space.
He admitted that given the experimental nature of the project, his public support for Luna, including getting a tattoo of Luna, was premature.
This letter has become one of the most widely cited analyses following the Luna crash, as it honestly assesses that even experienced investors can make mistakes with emerging technologies.
Betting on Artificial Intelligence Infrastructure
As the cryptocurrency market recovers from the collapse of Terra Luna and FTX, Novogratz is already planning its next steps. The company announced a significant expansion into the artificial intelligence infrastructure sector, leveraging its experience in energy-intensive computing operations to enter the AI data center market.
Galaxy Digital has learned how to operate large-scale computing infrastructure through its cryptocurrency mining business. The skills optimized for Bitcoin mining can be applied to AI computing, potentially yielding higher profit margins and more predictable revenue streams.
In August 2024, Galaxy Digital secured a $1.4 billion project financing for its Helios data center campus in Texas. The facility will provide 800 megawatts of computing power for GPU cloud provider CoreWeave, having signed a 15-year contract that is expected to generate over $1 billion in revenue annually.
The Helios project aims to comprehensively develop an electricity capacity of up to 3.5 gigawatts, making it a major player in the supply-constrained artificial intelligence infrastructure market. This business model promises higher profit margins and more predictable revenues than cryptocurrency trading business.
The company maintains its existing cryptocurrency business while expanding into adjacent technology areas that leverage its current expertise.
Cryptocurrency has always been a blend of finance and drama. Few embody this as perfectly as Novogratz.
He is a storytelling trader and a trading storyteller. Luna's tattoos, candid letters, appearances on cable television. These are not just confessions or branding, but proof that the market is driven by both narrative and data.
The enterprises he established, whether it's Fortress's macro fund or the hybrid of Galaxy Digital combining trading, venture capital, and now artificial intelligence data centers, are all attempts to give form to a power greater than any individual. The volatility of currency, decentralized finance, and the computational demands of machine learning.
If he sometimes seems reckless, it is because he is taking risks in uncertain territories. And if he sometimes appears to have foresight, it is because these areas reward the few who act quickly, absorb losses, and can still double down on the next bet.
For Novogratz, the question has never been whether cryptocurrencies or artificial intelligence will fail. Because they cannot keep rising indefinitely. The question is who can build a resilient enough platform to withstand these failures. Amid all the chaos and drama surrounding him, this may become his most important contribution: providing the next generation of adventurers with a higher scaffold to stand on.