# GALAXY DIGITAL PARTNERS LLC X-17A-5 (2023-04-14) — Broker-dealer annual report - Company: GALAXY DIGITAL PARTNERS LLC - Form: X-17A-5 - Filed: 2023-04-14 - Period: 2022-12-31 - Accession: 0001714418-23-000001 - CIK: 1714418 - File #: 8-70001 - Type: Broker-dealer - Material weakness: No - Auditor: Withum Smith & Brown, PC - Auditor location: Whippany, NJ - Contact: Fredric Obsbaum - Phone: 212-897-1694 - Signed by: Frederic Obsbaum (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1714418/000171441823000001/gadi22s.pdf --- {0}------------------------------------------------ **UNITED ST A TES SECURITIES AND EXCHANGE COMMISSION Washington, D.C 20549 ANNUAL REPORTS FORM X-17A-5** PART III **FACING PAGE** 0MB APPROVAL OMS Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 SEC FILE NUMER 8- 70001 Information Required Pursuant to Rules I 7a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FT UNG FOR THE PERIOD BEGINNING **O 1/01 /22** MM/DDNY AND ENDING **12/31 /22** MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME oF FIRM: Galaxy Digital Partners LLC TYPE OF REGISTRANT (check all applicable boxes): ~ Broker-dealer D Security-based swap dealer D Major security-based swap participant D Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) 300 Vesey Street - 13th Floor *(No\_* and Street) New York NY (City) (Slate) PERSON TO CONTACT WlTH REGARD TO THlS FILING 10282 (Zip Code) Fredric Obsbaum (212) 897-1694 obsbaum@integrated.so1utions (Name) (Area Code - Telephone Number) (Email Address) **B. ACCOUNT ANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* WithumSmith+Brown, PC (Name- if individual. state last. first, and middle name) 200 Jefferson Park Whippany NJ (Address) (City) (State) 10/08/2003 100 07981 (Zip Code) (Date of Registration with PCAOB)(if applicable) (PCAOB Registration Number. if applicable) #### **FOR OFFICIAL USE ONLY** • Claims for exemption from lhc requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as lhe basis oflhe exemption. See 17 CFR 240.17a-5(e)( I )(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number. {1}------------------------------------------------ Statement of Financial Condition December 31, 2022 {2}------------------------------------------------ ## **AFFIRMATION** J, Fredric Obsbaum , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to Galaxy Digital Partners LLC as of 12/31/22 , is true and correct. I further swear (or a1Tmn) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ~ **CFO** **Title** ~ *oq-lf//2.c.9.3* **otary Public** ~fER\lT ROl'FAlL \"OTA RY Pl'BLIC 'l.ilt' or \e,1 l:rse\ \!~ LC•;;·r,i. Exp1r~,; :>.;:-·~m~r23. :(,:o {3}------------------------------------------------ # **This filing\*\* contains (check all applicable boxes):** - 00 (a) Statement of financial condition. - 00 (b) Notes to unconsolidated or consolidated statement of financial condition, as applicable. - D (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation **S-X).** - D (d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or members· or sole proprietor's equity, as applicable. - D (t) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to unconsolidated or consolidated financial statements., as applicable. - D (h) Computation of net capital under 17 CFR 240. I 5c3-1 or 17 CFR 240. J &a-I. as applicable. - D (i) Computation of tangible net worth under 17 CFR 240. l 8a-2. - D U) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240. I 5c3- 3 or Exhibit A to 17 CFR 240.18a-4. as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Tnformation relating to possession or control requirements for customers under t 7 CFR 240. l 5c3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240. l 5c3- 3(p)(2) or t 7 CFR 240. J 8a-4, as applicable. - D (o) Reconciliations, including appropriate explanations. of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3- l, 17 CFR 240. l 8a-l. or t 7 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240. l 5c3-3 or 17 CFR 240. I 8a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - 00 (q) Oath or affirmation in accordance with 17 CFR 240. I 7a-5. 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240. I 7a-5 or 17 CFR 240.18a-7. as applicable. - D (s) Exemption report in accordance with 17 CFR 240. J 7a-5 or 17 CFR 240. J 8a-7, as applicable. - D (t) Independent public accountant's report based on an examination of the statement of financial condition. - 00 (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240. I 7a-5, 17 CFR 240. I 8a-7, or 17 CFR 240. I 7a-l 2, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240. I 7a-5 or 17 CFR 240. I 8a-7. as applicable. - D (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240. I 7a-5 or 17 CFR 240.18a-7, as applicable. - D (x) Supplemental reports on applying agreed-upon procedures. in accordance with 17 CFR 240. I 5c3-I e or 17 CFR 240. I 7a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240. I 7a-12(k). D (z) Other:----------------------------------- - *\*\*To request confidential treatment of certain portions of this filing. see 17 CFR 240.* J *7a-5(e)(3) or 17 CFR 240.* J *8a-7(d)(2), as applicable.* {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Management and Member of Galaxy Digital Partners LLC: #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Galaxy Digital Partners LLC (the "Company"), as of December 31, 2022, and the related notes (collectively referred to as the "financial statement"). In our opinion. the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial sstatement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2019. Whippany, New Jersey April 13, 2023 WithumSmith+Brown, PC 200 Jcllr:n;on Park, Si.. :e 1.00. Wi11poary New Jc,scy 0798 1 1070 T 1973l 89E 91.91. F 19731898 0686 w1thum.com {5}------------------------------------------------ # **Statement of Financial Condition December 31, 2022** | Assets | | | |------------------------------------------|------------------|--| | Cash | 17,401,509
\$ | | | Receivable from broker | 4.860 | | | Securities owned, not readily marketable | 827,749 | | | Accounts receivable | 27,661 | | | Prepaid expenses and other assets | 3,413 | | | Total assets | \$ 18,265,192 | | | Liabilities and Member's Equity | | | | Liabilities | | | | Accounts payable and accrued liabilities | 84,328
\$ | | | Contract liabilities | 2,020,000 | | | Due to affiliated companies | 295,110 | | | Total liabilities | 2,399,438 | | | Member's equity | 15,865,754 | | | | | | | Total liabilities and member's equity | \$
18,265,192 | | The accompanying notes are an integral part of this statement of fi nancial condition. {6}------------------------------------------------ # **Notes to Statement of Financial Condition As of December 31, 2022** # **1. Organization and Business** Galaxy Digital Partners LLC (the "Company") is a limited liability company formed under the laws of New York and is a wholly owned subsidiary of Galaxy Digital LP., (the "Parent"). The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority (''FTNRA"). The Company's principal business is selling private placements, underwritings and advisory services. ## **2. Summary of Significant Accounting Policies** # **Basis of Presentation** These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts ofrevenues and expenses during the reporting period. Actual results could differ from these estimates. # **Cash** The Company maintains the majority of its cash at two commercial banks. The Federal Deposit Insurance Corporation ("FDIC") covers \$250,000 for substantially all deposit accounts. Please refer to footnote 6. #### **Income Taxes** The Company is a wholly owned single member limited liability company and is treated as a disregarded entity for tax purposes. At December 31, 2022, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will be subject to ongoing reevaluation as facts and circumstances may require. Interest and penalties assessed, if any, are multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. ## **Accounts Receivable and Contract Assets and Liabilities Balances** Accounts receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. There were accounts receivable of \$94,585 on January I, 2022, which were collected in 2022, and no contract assets or contract liabilities. As of December 31, 2022, there were accounts receivable of \$27,661, no contract assets and contract liabilities of\$2.020.000. #### **Allowance for Credit Losses** The Company follows ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset. {7}------------------------------------------------ # **Notes to Statement of Financial Condition As of December 31, 2022** # **2. Significant Accounting Policies (continued)** The Company identified accounts receivable and receivable from broker as impacted by the guidance. An allowance for credit losses may be based on the Company's expectation of the collectability of its receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with its receivables is not significant. Accordingly, the Company has not provided an allowance for credit losses at December 31, 2022. # **3. FAIR VALUE MEASUREMENTS** U.S. GAAP defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. - Level 2 Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. - Level 3 Unobservable inputs for the asset or liability that rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fairvalue may fall into different levels of the fair value hierarchy. Tn such cases, for disclosure purposes, the level in the fair value hierarchy within which the fairvalue measurement fat Is in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. {8}------------------------------------------------ # **Notes to Statement of Financial Condition As of December 31, 2022** ## **3. Fair Value Measurements (continued)** The following table presents the Company's fair value hierarchy for the investments measured at fair value as of December 31, 2022: | Securities owned, not readily marketable | Level2
Level I | | Level3 | | Total | | | |------------------------------------------|-------------------|--|--------|----|---------------------------------------------------------|----|------------| | Common stock | \$ | | \$ | \$ | 827,749 | \$ | 827.749 | | Total | \$ | | \$ | | \$ 827,749
===i===--=----=--==-=-=,,,ii,iii,i,,loi,, | | \$ 827,749 | The following table represents the change in Level 3 fair value as of December 31, 23022: | Change in Level 3 Fair Value | | | | |------------------------------|-------------|---------|--| | Balance January I, 2022 | \$ | | | | Receipt of common shares | 1,845,000 | | | | Unrealized loss | (1,017,251) | | | | Balance December 31, 2022 | \$ | 827,749 | | ## **4. Transactions with Related Parties** At December 31, 2022, the Company had a service agreement with Galaxy Digital Services LLC ("'GOS"), an affiliated company. The affiliate provides office space, compensation expenses. professional and consulting fees, and other services pursuant to a service agreement. The Company is not required to make any payments to GOS under the agreement. GOS paid additional expenses outside of the service agreement of \$286,446 on behalf of the Company that are reflected as expenses on the statement of operations. As of December 31, 2022, the company owes GOS \$295,110 that is reflected on the statement of financial condition. The company paid other affiliated entities \$8,664 due to balances owed to them as of January I, 2022. The balances were attributable to expenses paid by them during the prior year on behalf of the Company. The terms of these arrangements may not be the same as those that would otherwise exist or result from agreements and transactions among unrelated parties. # **5. Regulatory Requirement~** The Company is subject to SEC Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to I. At December 31, 2022, the Company had net capital of approximately \$15,006,000 which exceeded the required net capital of \$159,963 by approximately \$14,846,000. The Company does not hold customers' cash or securities; therefore, it has no obligations under SEC Rule I 5c3-3 under the Securities Exchange Act of 1934. {9}------------------------------------------------ # **Notes to Statement of Financial Condition As of December 31, 2022** ## **6. Concentration of Credit Risk** The Company currently maintains most of its cash at a FINRA member broker-dealer. It previously maintained its cash at a commercial bank where the Federal Deposit Insurance Corporation ("FDTC") covered deposit account balances up to \$250,000. On March 12, 2023, Signature Bank (''Signature"), New York, NY, the Company's primary bank was closed by the New York State Department of Financial Services and the FDIC was named receiver. After March 12, 2023, the Company transferred all its cash from Signature to the FlNRA member broker-dealer. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.