Michael Novogratz: Wall Street Refugee

Original Title: Michael Novogratz: The Wall Street Refugee

Original Author: Thejaswini M A, Token Dispatch

Original Translation: Block unicorn

May 18, 2022. Michael Novogratz stared at his arm.

The Terra Luna tattoo gazed back at him. This crescent tattoo had cost him millions of dollars and nearly ruined his reputation. Luna’s price plummeted from $80 to zero in 72 hours, wiping out $60 billions—a collapse now known in the crypto world as the “death spiral.”

Most CEOs would hire a crisis management firm, blame market manipulation, or simply stay silent until the news cycle moved on.

What did Novogratz do? He sat down and wrote a letter.

“My tattoo will be a constant reminder that venture investing requires humility,” he wrote in the letter, detailing what went wrong and what Galaxy Digital learned from supporting one of the biggest disasters in crypto history. The letter was made public that afternoon.

When a bet fails, the standard playbook is to issue a carefully worded statement, shift attention to “market conditions,” and wait for the headlines to fade. Novogratz didn’t do that. He wrote a letter.

He didn’t shirk responsibility. Instead, he described in detail what happened with Terra, what Galaxy Digital misjudged, and what he himself learned. In finance, candor is not unheard of, but he turned it into an industry case study. Others might try to downplay losses, but he put his own missteps in the spotlight, inviting everyone to document the lessons together.

Novogratz has never been a typical Wall Street figure. The former Goldman Sachs partner and Princeton wrestler built his career by treating both victories and defeats as material for the next big move.

The collapse of Terra Luna would have ended the careers of most crypto professionals. For Novogratz, it was just another chapter in a story that began on the wrestling mat, passed through currency trading floors, and now encompasses everything from Bitcoin advocacy to billion-dollar AI data centers.

Personal Growth

November 26, 1964: Alexandria, Virginia

Michael Novogratz was born the third of seven children in a family that treated competition the way other families treated vegetables: necessary, healthy, and non-negotiable. His father had played football at West Point, so the expectation of excellence was basic—at the very least, you had to show convincing results.

At Fort Hunt High School, Novogratz discovered wrestling. It was more than a sport; it was a laboratory where he learned how to read opponents, manage risk under pressure, and understand that preparation mattered more than talent.

He finished runner-up at the state championships and was then recruited by Princeton University. Competing in Division I wrestling in the Ivy League meant cutting weight, tactical preparation, and everything depending on individual performance. Novogratz captained the Princeton wrestling team and was named to the All-Ivy First Team in 1986 and 1987.

April 1, 1989: Goldman Sachs

Novogratz joined Goldman Sachs as a short-term bond salesman, one of hundreds of young recruits each year hoping to become partners. Most would fail within five years. A few would get rich. Even fewer would understand the bigger game.

What set Novogratz apart was his timing and willingness to take on assignments others might avoid. In 1992, Goldman sent him to Asia, where over the next seven years he experienced currency volatility, interest rate shocks, and ultimately witnessed the 1997 Asian financial crisis. This gave him a front-row seat to one of the most turbulent chapters in modern markets and made him one of Goldman’s global macro experts.

This period of experience in currency and interest rate markets made him one of Goldman’s global macro experts when he was elected partner in 1998.

Partnership brought equity, profit sharing, and access to internal investment opportunities. More importantly, it made him a global macro expert as Goldman prepared to dominate financial markets in the coming decade.

But Novogratz’s climb wasn’t over.

The Fortress Empire and Its Fall

2022: Fortress Investment Group

Novogratz left Goldman to join one of the most iconic alternative investment platforms of the 2000s. Fortress was expanding from private equity and credit into global macro, and they needed someone who knew how to profit from currency chaos, interest rate swings, and commodity supercycles.

At the time, central banks were actively managing exchange rates, emerging markets were opening up to international capital, and technology was spawning new ways to trade everything from the Brazilian real to copper futures. Macro investing was entering a golden age.

Novogratz ran Fortress’s macro fund, which grew to $2.3 billions in assets under management. The fund ran successfully for over a decade until the market environment changed after 2008.

February 2007: Fortress Goes Public

The company became the first major U.S. alternative asset manager to go public, briefly creating several paper billionaires. Novogratz and his partners graced magazine covers and gave keynote speeches at major conferences. For 18 months, they were the stars of finance, riding the crest of the credit bubble.

Then, 2008 hit like a meteor.

The financial crisis fundamentally changed the macro trading environment. Central banks began coordinating policy more closely, currency relationships shifted in unexpected ways, and many of the market inefficiencies exploited by macro funds disappeared.

By 2013, macro funds were struggling. The post-crisis era was challenging for many macro strategies. Coordinated central bank policies reduced the volatility macro traders needed. Methods that had worked for a decade suddenly failed completely.

October 2015: Announcement Released

Fortress would liquidate its $2.3 billions macro business. Novogratz would exit, and capital would be returned to investors. Thirteen years of building a top-tier macro business ended with a press release and a series of final investor calls.

This closure could have ended a career. However, Novogratz saw it as an education. The success of macro funds was built on identifying policy-driven market dislocations and exploiting them before others noticed. Their failure reflected changing market conditions, not mismanagement.

He would need this lesson sooner than he expected.

The Digital Gold Rush

2013: New York, Fortress Office

Fortress Investment Group co-CEO and former Goldman colleague Pete Briger called Novogratz and asked a question that would change his life: “Bro, do you know about Bitcoin?”

The answer was: not at all.

Novogratz had never heard of digital currency, blockchain technology, or crypto. Like most traditional finance professionals, he thought it was either a scam or a toy for programmers.

But Briger, after talking with friends in California, was convinced Bitcoin represented something more important. They teamed up with former Tiger Management executive Dan Morehead, who founded Pantera Capital, one of the first investment firms focused on crypto.

They made their first purchase when Bitcoin was around $200. At first, it was just another macro bet. If digital currency succeeded, early adopters would profit. If it failed, they could afford the loss.

This was a non-sovereign store of value emerging as central banks engaged in unprecedented monetary expansion. It offered exposure to technological disruption while hedging against currency debasement.

By 2016, Novogratz had become one of the most prominent crypto advocates, appearing on financial TV to explain digital assets to institutional audiences who might otherwise ignore other crypto enthusiasts. His Goldman background and macro investing experience gave him credibility with traditional investors just beginning to view crypto as a legitimate asset class.

But advocacy wasn’t enough. He wanted to build something.

January 9, 2018: Galaxy Digital Officially Announced

Novogratz unveiled plans to build an integrated digital asset platform, combining trading, asset management, investment banking, and proprietary investing.

The vision was to become the Goldman Sachs of crypto, offering institutions the same range of services as a traditional investment bank but focused on digital asset markets.

Through a business combination with a Canadian company, Galaxy was able to go public at a time when the regulatory framework for crypto businesses was still unclear. On July 31, 2018, Galaxy completed a reverse takeover and began trading on the Toronto Stock Exchange’s Venture Exchange under the ticker GLXY.

Galaxy’s business model differed from pure crypto companies. Rather than simply buying and holding digital assets, the company actively traded its treasury positions, using profits from successful trades to fund operations and expansion. This approach was more flexible than a pure holding strategy but meant financial results partly depended on market timing and trading performance.

During crypto bull markets, this strategy performed extremely well. As Bitcoin and Ethereum appreciated, Galaxy’s treasury operations generated hundreds of millions of dollars in profits. The company’s venture investments in crypto infrastructure and applications created even more value as the ecosystem matured.

But 2022 brought new challenges.

May 2022. The Terra Luna ecosystem collapsed within days, wiping out $60 billions in value and destroying one of the most sought-after projects in crypto. When Luna’s algorithmic stablecoin mechanism catastrophically failed, Galaxy Digital faced both financial losses and reputational damage.

Galaxy Digital had invested in 18.5 million LUNA tokens at $0.22 each as early as 2020 and gradually sold as the price rose. By April 2022, when LUNA peaked at $119, Galaxy Digital had made hundreds of millions in profit and reduced its position to almost zero. When the algorithmic stablecoin mechanism finally failed, Galaxy Digital’s direct financial exposure was negligible: only about 2,000 LUNA tokens remained, worth less than ten dollars after the crash.

Novogratz didn’t hide from the mistake. Instead, he published a detailed explanation of what went wrong and what lessons the episode offered. His CEO letter discussed risk management, due diligence processes, and the importance of distinguishing sustainable business models from experimental protocols in crypto.

He admitted that, given the experimental nature of the project, his public support for Luna—including the Luna tattoo—was premature.

The letter became one of the most widely cited analyses after the Luna collapse, as it honestly assessed how even experienced investors can make mistakes with emerging technologies.

Betting on AI Infrastructure

2024: New York, Galaxy Office

As the crypto market recovered from the Terra Luna and FTX collapses, Novogratz was already planning Galaxy’s next move. The company announced a major expansion into AI infrastructure, leveraging its experience in energy-intensive computing operations to enter the AI data center market.

Through its crypto mining business, Galaxy learned how to operate large-scale computing infrastructure. The skills used to optimize Bitcoin mining could be applied to AI computing, but with potentially higher margins and more predictable revenue streams.

In August 2024, Galaxy secured $1.4 billions in project financing for its Helios data center campus in Texas. The facility will provide 800 megawatts of computing power to GPU cloud provider CoreWeave under a 15-year contract, with Galaxy expecting to generate over $1 billions in annual revenue.

The Helios project aims to develop up to 3.5 gigawatts of power capacity at full build-out, making Galaxy a major player in the supply-constrained AI infrastructure market. The business model promises higher margins and more predictable income than crypto trading operations.

The company maintains its existing crypto business while expanding into adjacent technology fields that leverage its core expertise.

Crypto has always been a blend of finance and drama. Few embody this as perfectly as Novogratz.

He is a storyteller who trades, and a trader who tells stories. The Luna tattoo, the candid letters, the cable TV appearances—these are not just confessions or branding, but proof that markets are driven by both narrative and data.

The businesses he has built—whether Fortress’s macro fund or Galaxy’s hybrid of trading, venture capital, and now AI data centers—are attempts to give shape to forces bigger than any individual: currency volatility, decentralized finance, the computational demands of machine learning.

If he sometimes seems reckless, it’s because he ventures into domains where certainty doesn’t exist. And if he sometimes seems prescient, it’s because these domains reward the few who move fast, absorb losses, and still double down on the next bet.

For Novogratz, the question was never whether crypto or AI would encounter failure—because they can’t always go up. The question is who can build a platform resilient enough to withstand those failures. Amid all the chaos and drama surrounding him, this may be his most important contribution: providing a higher scaffolding for the next generation of risk-takers.

That’s all for today.