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FAIR VALUE OPTION | 3 Months Ended
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Mar. 31, 2025
Galaxy Digital Services, LP |
FAIR VALUE MEASUREMENTS | FAIR VALUE OPTION The Company elected the fair value option for certain eligible assets. The following table summarizes the financial instruments for which the fair value option has been elected:
(in thousands) |  | December 31, 2024 |  | December 31, 2023 |  |  |  |
Assets |  |  |  |  |  |  |  |
Digital financial assets |  | $ | 359,664 |  |  | $ | 74,386 |  |  |  |  |
Investments |  | 558,093 |  |  | 398,529 |  |  |  |  |
Total |  | $ | 917,757 |  |  | $ | 472,915 |  |  |  |  |
The fair value option was only elected for investments, within the Investments line item, where the Company was deemed to have significant influence and otherwise would have applied the equity method of accounting. Realized and unrealized gains / (losses) on financial instruments for which the fair value option has been elected are recorded as Net gain / (loss) on investments and Net gain / (loss) on digital assets in the Company’s consolidated statements of operations. The following table presents the realized and net change in unrealized gains / (losses) on the financial instruments on which the fair value option was elected:
|  | December 31, 2024 |  | December 31, 2023 |  | December 31, 2022 |  |  |  |  |  |
(in thousands) |  | Realized Gains / (Losses) |  | Net Change in Unrealized Gains / (Losses) |  | Realized Gains / (Losses) |  | Net Change in Unrealized Gains / (Losses) |  | Realized Gains / (Losses) |  | Net Change in Unrealized Gains / (Losses) |  |  |  |  |  |  |  |  |  |  |  |
Investments |  | $ | 83,441 |  |  | $ | 130,980 |  |  | $ | (833) |  |  | $ | 88,757 |  |  | $ | 48,501 |  |  | $ | (320,050) |  |  |  |  |  |  |  |  |  |  |  |
Realized and unrealized gains and (losses) for digital assets classified as financial assets was $0.3 million and $11.8 million for the years ended December 31, 2024 and 2023, respectively, and were not significant for the year ended December 31, 2022. FAIR VALUE MEASUREMENTS Recurring fair value measurements Items measured on a recurring basis at fair value:
|  | As of December 31, 2024
(in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |
Digital financial assets |  | $ | 354,851 |  |  | 4,814 |  |  | $ | — |  |  | 359,665 |
Digital intangible assets at fair value |  | 1,929,661 |  |  | 68,239 |  |  | 20,457 |  |  | 2,018,357 |
Digital assets loan receivable, net of allowance — Financial assets |  | — |  |  | 393,734 |  |  | — |  |  | 393,734 |
Digital assets receivable |  | 204 |  |  | 24 |  |  | 60,492 |  |  | 60,720 |
Assets posted as collateral — Digital assets |  | — |  |  | 278,527 |  |  | — |  |  | 278,527 |
Derivative assets |  | 188,836 |  |  | 18,817 |  |  |  |  | 207,653 |
Embedded derivative — Collateral payable |  | — |  |  | 55,848 |  |  | — |  |  | 55,848 |
Embedded derivative — Digital assets borrowed |  | — |  |  | 24,039 |  |  | — |  |  | 24,039 |
Investments(1) |  | 751,220 |  |  | — |  |  | 524,573 |  |  | 1,275,793 |
|  | $ | 3,224,772 |  |  | $ | 844,042 |  |  | $ | 605,522 |  |  | $ | 4,674,336 |
Liabilities |  |  |  |  |  |  |  |
Investments sold short (2) |  | 6,524 |  |  | — |  |  | — |  |  | 6,524 |
Derivative liabilities |  | 58,155 |  |  | 107,703 |  |  |  |  | 165,858 |
Embedded derivative — Digital assets borrowed |  |  |  | 252,635 |  |  |  |  | 252,635 |
Embedded derivative — Collateral payable |  |  |  | 161,261 |  |  |  |  | 161,261 |
Embedded derivative — Notes payable |  | — |  |  | — |  |  | 136,192 |  |  | 136,192 |
|  | $ | 64,679 |  |  | $ | 521,599 |  |  | $ | 136,192 |  |  | $ | 722,470 |
__________________ (1)Excludes equity securities measured utilizing net asset value as a practical expedient ($304.5 million) and equity securities utilizing the measurement alternative as they are without readily determinable fair values ($63.2 million). (2)Investments sold short are included in Other current liabilities in the Company’s condensed consolidated interim statements of financial position.
|  | As of December 31, 2023
(in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |
Digital financial assets |  | $ | 74,386 |  |  | $ | — |  |  | $ | — |  |  | 74,386 |
Digital intangible assets at fair value |  | 655,473 |  |  | 12,674 |  |  | 68,004 |  |  | 736,151 |
Digital assets loan receivable, net of allowance — Financial assets |  | — |  |  | 12,000 |  |  | — |  |  | 12,000 |
Digital assets receivable |  | 196 |  |  | 95 |  |  | 20,569 |  |  | 20,860 |
Assets posted as collateral — Digital assets |  | — |  |  | 316,104 |  |  | — |  |  | 316,104 |
Derivative assets |  | 59,724 |  |  | 113,485 |  |  | — |  |  | 173,209 |
Embedded derivative — Collateral payable |  | — |  |  | 4,244 |  |  | — |  |  | 4,244 |
Embedded derivative — Digital assets borrowed |  | — |  |  | 877 |  |  | — |  |  | 877 |
Investments(1) |  | 43,568 |  |  | — |  |  | 364,576 |  |  | 408,144 |
|  | $ | 833,347 |  |  | $ | 459,479 |  |  | $ | 453,149 |  |  | $ | 1,745,975 |
Liabilities |  |  |  |  |  |  |  |
Investments sold short |  | 25,295 |  |  | — |  |  | — |  |  | 25,295 |
Derivative liabilities |  | 55,567 |  |  | 105,075 |  |  | — |  |  | 160,642 |
Embedded derivative — Digital assets borrowed |  | — |  |  | 29,874 |  |  | — |  |  | 29,874 |
Embedded derivative — Collateral payable |  | — |  |  | 134,695 |  |  | — |  |  | 134,695 |
Embedded derivative — Notes payable |  | — |  |  | — |  |  | 10,472 |  |  | 10,472 |
|  | $ | 80,862 |  |  | $ | 269,644 |  |  | $ | 10,472 |  |  | $ | 360,978 |
__________________ (1)Excludes equity securities measured utilizing net asset value as a practical expedient ($243.3 million) and equity securities utilizing the measurement alternative as they are without readily determinable fair values ($83.7 million). Nonrecurring fair value measurements Impairment losses are recognized for Digital intangible assets carried at the lower of cost or impaired value and Property and equipment, net when their carrying amounts exceed fair value. The carrying values for Digital intangible assets carried at the lower of cost or impaired value were $550.2 million and $277.6 million as of December 31, 2024 and 2023, respectively. The Company categorized the fair value measurements for Property and equipment, net as Level 3. The following tables summarize changes in assets and liabilities measured and reported at fair value for which Level 3 inputs have been used to determine fair value for the years ended December 31, 2024 and 2023 respectively:
(in thousands) Assets |  | Fair value, Beginning Balance |  | Purchases |  | Sales/Distributions |  | Net Realized Gain / (Loss) |  | Net Unrealized Gain / (Loss) |  | Transfers in/(out) of Level 3 |  | Fair value, Ending Balance
Digital intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | $ | 68,004 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (17,043) |  |  | $ | (30,504) |  |  | $ | 20,457 |
2023 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 65,073 |  |  | $ | 2,931 |  |  | $ | 68,004 |
Digital assets receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | $ | 20,569 |  |  | $ | — |  |  | $ | (4,727) |  |  | $ | 4,724 |  |  | $ | 52,477 |  |  | $ | (12,551) |  |  | $ | 60,492 |
2023 |  | $ | 16,054 |  |  | $ | 200 |  |  | $ | — |  |  | $ | — |  |  | $ | 17,101 |  |  | $ | (12,786) |  |  | $ | 20,569 |
Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | $ | 364,576 |  |  | $ | 129,188 |  |  | $ | (221,564) |  |  | $ | 117,036 |  |  | $ | 119,803 |  |  | $ | 15,534 |  |  | $ | 524,573 |
2023 |  | $ | 170,526 |  |  | $ | 30,077 |  |  | $ | (2,890) |  |  | $ | 949 |  |  | $ | 121,242 |  |  | $ | 44,672 |  |  | $ | 364,576 |
Embedded derivative - Notes payable |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | $ | 10,472 |  |  | $ | 93,993 |  |  | $ | — |  |  | $ | — |  |  | $ | 31,727 |  |  | $ | — |  |  | $ | 136,192 |
2023 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 9,604 |  |  | $ | 868 |  |  | $ | 10,472 |
Transfers in and out of Level 3 are considered to have occurred at the beginning of the period the transfer occurred. For the year ended December 31, 2024, gross transfers into Level 3 were $21.2 million and gross transfers out of Level 3 were $48.7 million. The transfers into Level 3 for Investments were due to fair value adjustments determine by unobservable market inputs. The transfers into Level 3 for Digital asset receivables were due to underlying token launches of contracts held. Transfers out of Level 3 for Investments related to a conversion of a convertible note upon emergence from a bankruptcy during the year. Transfers out of Level 3 for Digital asset receivables and Digital assets were due to removal of restrictions. For the year ended December 31, 2023, gross transfers into Level 3 were $67.3 million and gross transfers out of Level 3 were $31.6 million. Transfers into Level 3 were due to fair value adjustments determined by unobservable market inputs, recategorization and underlying token launches of contracts held. The transfers out of Level 3 were due to removal of restrictions. The following table presents additional information about valuation methodologies and significant unobservable inputs used for assets and liabilities that are measured and reported at fair value and categorized within Level 3 as of December 31, 2024 and 2023, respectively:
Financial Instrument |  | Fair Value at December 31, 2024 (in thousands) |  | Significant Unobservable Inputs |  | Range |  | Weighted Average
Digital intangible assets |  | $ | 20,457 |  |  | Marketability discount |  | 15.9% - 45.2% |  | 32.1%
Digital assets receivable |  | $ | 60,492 |  |  | Marketability discount |  | 5.5% - 72.8% |  | 35.8%
Investments |  | $ | 524,573 |  |  | Time to liquidity event (years) |  | 1.0 - 5.0 |  | 4.1
|  |  |  | Annualized equity volatility |  | 70.0% - 90.0% |  | 88.8%
|  |  |  | Risk free rate |  | 3.4% - 4.4% |  | 4.2%
|  |  |  | Market adjustment discount |  | 30.0% - 90.0% |  | 41.0%
|  |  |  | Market adjustment premium |  | 25.0% - 130.0% |  | 79.6%
|  |  |  | Marketability discount |  | 3.5% - 51.8% |  | 26.0%
|  |  |  | Expected dividend payout ratio |  | —% - —% |  | 0%
|  |  |  | Enterprise value to LTM revenue multiple |  | 2.5x - 16.8x |  | 10.8x
|  |  |  | Enterprise value to projected revenue multiple |  | 2.0x - 10.5x |  | 7.0x
|  |  |  | Enterprise value to annualized revenue |  | 3.5x - 9.0x |  | 6.7x
|  |  |  | Enterprise value to LTM volume |  | 3.0x |  | 3.0x
|  |  |  | Enterprise Value to ARR |  | 8.5x - 15.8x |  | 10.9x
|  |  |  | Price to tangible book value |  | 1.5x |  | 1.5x
|  |  |  | Enterprise value to projected EBITDA |  | 9.0x - 14.0x |  | 11.5x
|  |  |  | Scenario probability |  | 35.0% |  | 35.0%
|  |  |  | Recovery percentage |  | 35.0% - 61.6% |  | 51.5%
Embedded derivative — Notes payable |  | $ | 136,192 |  |  | Volatility |  | 45.6% - 75.0% |  | 55.4%
|  |  |  | Risk free rate |  | 4.2% - 4.4% |  | 4.3%
|  |  |  | Time-step (years) |  | 0.004 |  | 0.004
Financial Instrument |  | Fair Value at December 31, 2023 (in thousands) |  | Significant Unobservable Inputs |  | Range |  | Weighted Average
Digital intangible assets |  | $ | 68,004 |  |  | Marketability discount |  | 3.3% - 59.4% |  | 15.4%
Digital assets receivable |  | $ | 20,569 |  |  | Marketability discount |  | 6.1% - 74.4% |  | 28.5%
Investments |  | $ | 364,576 |  |  | Time to liquidity event (years) |  | 3.0 - 5.0 |  | 4.6
|  |  |  | Annualized equity volatility |  | 90.0% |  | 90.0%
|  |  |  | Risk free rate |  | 3.5% - 4.2% |  | 3.9%
|  |  |  | Control discount |  | 7.5% - 20.0% |  | 11.1%
|  |  |  | Market adjustment discount |  | 25.0% - 65.0% |  | 37.4%
|  |  |  | Marketability discount |  | 5.7% - 40.0% |  | 15.4%
|  |  |  | Enterprise value to revenue multiple |  | 2.0x- 12.0x |  | 9.4x
|  |  |  | Enterprise value to projected revenue multiple |  | 2.0x - 8.0x |  | 4.4x
|  |  |  | Enterprise value to volume multiple |  | 5.5x |  | 5.5x
|  |  |  | Recovery percentage |  | 120.1% |  | 120.1%
|  |  |  | Claims percentage |  | 68.0% |  | 68.0%
Embedded derivative — Notes payable |  | $ | 10,472 |  |  | Volatility |  | 67.0% |  | 67.0%
|  |  |  | Risk free rate |  | 4.0% |  | 4.0%
|  |  |  | Time-step (years) |  | 0.004 |  | 0.004
Increases and/or decreases in the various unobservable inputs used to determine the Level 3 valuations could result in significantly higher or lower fair value measurements. Financial Instruments Not Measured at Fair Value The following table presents the fair value of financial instruments not measured at fair value in the Company’s consolidated statements of financial position. This table excludes non-financial assets and liabilities.
|  | As of December 31, 2024
(in thousands) |  | Carrying Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash and cash equivalents |  | $ | 462,103 |  |  | $ | 462,103 |  |  | $ | 462,103 |  |  | $ | — |  |  | $ | — |
Assets posted as collateral — Cash |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Accounts receivable |  | 55,279 |  |  | 55,279 |  |  | 55,279 |  |  | — |  |  | — |
Loans receivable |  | 476,620 |  |  | 476,620 |  |  | — |  |  | 476,620 |  |  | — |
Total Assets |  | $ | 994,002 |  |  | $ | 994,002 |  |  | $ | 517,382 |  |  | $ | 476,620 |  |  | $ | — |
Accounts payable and accrued liabilities |  | 281,531 |  |  | 281,531 |  |  | 281,531 |  |  | — |  |  | — |
Notes payable |  | 845,186 |  |  | 836,402 |  |  | — |  |  | 836,402 |  |  | — |
Collateral payable — Cash |  | 74,995 |  |  | 74,995 |  |  | — |  |  | 74,995 |  |  | — |
Payable to customers — Cash |  | 19,520 |  |  | 19,520 |  |  | — |  |  | 19,520 |  |  | — |
Loans payable |  | 510,718 |  |  | 510,718 |  |  | — |  |  | 510,718 |  |  | — |
Total Liabilities |  | $ | 1,731,950 |  |  | $ | 1,723,166 |  |  | $ | 281,531 |  |  | $ | 1,441,635 |  |  | $ | — |
|  | As of December 31, 2023
(in thousands) |  | Carrying Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash and cash equivalents |  | $ | 316,610 |  |  | $ | 316,610 |  |  | $ | 316,610 |  |  | $ | — |  |  | $ | — |
Assets posted as collateral — Cash |  | 2,091 |  |  | 2,091 |  |  | 2,091 |  |  | — |  |  | — |
Accounts receivable |  | 60,929 |  |  | 60,929 |  |  | 60,929 |  |  | — |  |  | — |
Loans receivable |  | 387,364 |  |  | 387,364 |  |  | — |  |  | 387,364 |  |  | — |
Total Assets |  | $ | 766,994 |  |  | $ | 766,994 |  |  | $ | 379,630 |  |  | $ | 387,364 |  |  | $ | — |
Accounts payable and accrued liabilities |  | 140,376 |  |  | 140,376 |  |  | 140,376 |  |  | — |  |  | — |
Notes payable |  | 408,053 |  |  | 342,161 |  |  | — |  |  | 342,161 |  |  | — |
Collateral payable — Cash |  | 11,367 |  |  | 11,367 |  |  | — |  |  | 11,367 |  |  | — |
Payable to customers — Cash |  | 3,442 |  |  | 3,442 |  |  | — |  |  | 3,442 |  |  | — |
Loans payable |  | 93,069 |  |  | 93,069 |  |  | — |  |  | 93,069 |  |  | — |
Total Liabilities |  | $ | 656,307 |  |  | $ | 590,415 |  |  | $ | 140,376 |  |  | $ | 450,039 |  |  | $ | — |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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