# GALAXY DIGITAL PARTNERS LLC X-17A-5 (2024-03-26) — Broker-dealer annual report

- Company: GALAXY DIGITAL PARTNERS LLC
- Form: X-17A-5
- Filed: 2024-03-26
- Period: 2023-12-31
- Accession: 0001714418-24-000001
- CIK: 1714418
- File #: 8-70001
- Type: Broker-dealer
- Material weakness: Yes
- Auditor: WithumSmith & Brown, PC
- Auditor location: Whippany, NJ
- Contact: Robert Rico
- Phone: 347-255-3049
- Email: rico@galaxy.com
- Website: galaxy.com
- Signed by: Robert Rico (CFO, FINOP)

Original filing: https://www.sec.gov/Archives/edgar/data/1714418/000171441824000001/gadi23s.pdf

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**UNITED STATES**  SECURITIES **AND EXCHANGE COMMISSION**  Washington, D.C. 20549 **ANNUAL REPORTS FORM X-17A-S PART Ill**  FACING PAGE 0 M B APPROVAL 0MB Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12 SEC FILE NUMBER 8-70001 Information Required Pursuant to Rules 17a·S, 17a·12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING **01 /01 /23**  MM/ DD/VY AND ENDING **12/31 /23**  MM/DD/VY **A. REGISTRANT IDENTIFICATION**  NAME oF FIRM: Galaxy Digital Partners LLC TYPE OF REGISTRANT (check all applicable boxes): <sup>~</sup>Broker-dealer D Security-based swap dealer D M ajor security-based swap participant 0 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 10282 (City} (State) (Zip Code} PERSON TO CONTACT WITH REGARD TO THIS FILING Robert Rico (34 7) 255-3049 robe rt. rico@galaxy.com (Name) (Area Code - Telephone Number) (Email Address) **B. ACCOUNTANT 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 07981 (Address} (City) (State) (Zip Code) 10/08/2003 100 r" of Regiwatloo with PCAOB)(lf applicable) **FOR** OFFICIAL USE ON Ly (PCAOB Registratioo N ,rnbec, If applkabl•l 1

• Claims for exemption from t he 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 the basis of the exemption. See 17 CFR 240.17a-5(e)(l)(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.

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# Galaxy Digital Partners LLC

Statement of Financial Condition December 31, 2023

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#### OATH OR **AFFIRMATION**

I, Robert Rico, swear (or affirm) that, to the best of my knowledge and belfef, the financial report pertaining to the firm of Galaxy Digital Partners LLC, as of December 31, 2023, is true and correct. I further swear (or affirm) 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.

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| Signature:~ | <' |  |
|-------------|----|--|
| ntle:       |    |  |
| CFO, FINOP  |    |  |

Notary Public

#### This fillngu contai ns (check all appllcable boxes):

- (a) Statement of financial condition.
- ~ (b) Notes to consolidated statement of financial condition.
- D (c) Statement of income (loss) or, lf 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 sole proprietor's equity.
- D (fl Statement of changes in liabilities subordinated to claims of creditors.
- D (g) Notes to consolidated financial statements.
- D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.l8a-l, as applicable.
- D (i) Computation of tangible net worth under 17 CFR 240.lSa-2.
- D 0) 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 240.15c3-3 or Exhib it A to 17 CFR 240.18a-4, as applicable.
- D (I) Computation for Determination of PAB Requirements under El<hiblt A to§ 240.15c3-3.
- D (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- D (nJ Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(pJ(2) or 17 CFR 240.lSa-4, as appllcable.
- D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a 1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-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.
- ~ (q) Oath or affirmation In accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- 0 (r) Compllance report In accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as appilcable.
- D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as applicable.
- D (t) Independent publlc accountant's report based on an examination of the statement of financial condition.
- (u) lndependenl public accountant's reporl based on an e.xamination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.l 7a-12, as applicable.
- D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- D (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- D (x) Supplemental reports on applying agreed-upon procedures, In accordance with 17 CFR 240.15c3-le or 17 CFR 240. l 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 240.17a-12(k). <sup>D</sup>(z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_ \_
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- "'\*To request confidential treotmenl of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2}, as applicable.

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# **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 , 2023, 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 , 2023, 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 statements, 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 March 8, 2024

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# Galaxy Digital Partners LLC

### tatement of Financial ondition **December 31, 2023**

| Assets                                   |                 |
|------------------------------------------|-----------------|
| Cash                                     | \$<br>2,606,228 |
| Receivable from broker                   | 1,093,629       |
| ccounts receivable                       | 2,611.269       |
| Due from affiliate - legal settlement    | 575,761         |
| Prepaid exp nse and other assets         | 1,534           |
| Total assets                             | \$<br>6,888,421 |
| Liabilities nnd Member' Equity           |                 |
| Accounts payable and accrued liabilities | \$<br>333,871   |
| Payable for legal settlement             | 575,761         |
| Contract liabilities                     | 115,000         |
| Due to affiliate companies               | 149,628         |
| Total liabilities                        | 1, 174,260      |
| Member's Equity                          | 5,714, 161      |
| Total liabilities and member's equity    | \$<br>6,888,421 |

The accompanying notes are an integral part of these financial statement.

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# Galaxy Digital Partner LLC

otes to the Statement of Financial Condition December 31. 2023

# I. ORGANIZATION AND nu lNE s

#### ature of Operations

Galaxy Digital Partners LLC (the "Company") is a limited liability company formed under the laws of ew York and is a wholly owned subsidiary of Galaxy Digital LP. (the ''Parent"). The Company is a broker-dealer registered with the ecurities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("Fl RA").

The Company's principal business is selling private placements, underwritings and advisory ervices.

#### 2. **SUMMARY OF IGNl FrCANT ACCO NTI G POLI IE**

#### Ba i **of Presentation**

These financial statements were prepared in confo1111ity with accounting principles generally accepted in the United tates 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 of revenues and expenses during the reporting period. Actual results could differ from these estimates.

#### Ca h

The Company maintains its cash at one commercial bank. The Federal Deposit Insurance Corporation ("FDIC') covers \$250,000 for substantially all deposit accounts. At times the Company's balances may be greater than the federally insured limit. ny loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results from operations, and cash nows.

#### **Income Taxes**

The Company is a wholly owned single member limited liability company and i treated as a disregarded entity for tax purposes.

Al December 31. 2023. management has derem1ined 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. fnterest and penalties assessed, if any, are recorded as income tax expense.

#### **Account Receiv11ble and Contract Assets and Liabilitie Balances**

Accounts receivable arise when the ompany has an unconditional right to receive payment under a contract with a customer and are derecognized when the ca h is received. As of January I, 2023 there were accounts receivable of \$27,661 , which were collected in 2023, no contract assets. and contract liabilities of \$2,020,000, of which \$1,945,000 have been fulfilled in 2023. As of December 3 I, 2023, there were accounts receivable of \$2.611 ,269, no contract assets, and contra t liabilities of \$115,000.

#### A IIO\ ance for Credit Los es

The Company follows ASC Topic 326, Financial Jnstruments - redit Losses (· A C 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 Ii fe of the financial asset.

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 frame, ork. 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 wirh its receivables is not significant. Accordingly, the Company has not provided an allowance for credit losses at December 31, 2023.

#### **3. FAIR VAL E MEA UREME T**

U .. GAAP defines fair value establishes a framework for measuring fa ir 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 al the measurement date. fair value measurement assumes thar 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. al uation techniques that are consistent with the market. income or c-0st approach are used to measure fair value.

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### **Galax.-y Digital Partners LLC**

otes to the Statement of Financial Condition December 31, 2023

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad le els:

Level I - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 - ignificant other observable inputs, which may include. but are not limited to. quoted price 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 a interest rates, yield curves, volatilities. prepayment speeds, loss severities, credit risks and default rates) or other market orroborated inputs.

Level 3 - Unobservable inputs for the asse1 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 besl information available in the circumstances and may include the Company's own data.

The availabi lity of observable inputs can vary from security to security and is affected by a wide variety of factors, including for example, rhe 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 observab le or unobservable in the marker. the detennination of fair valu requires more judgment. Accordingly, the degree of judgment e ercised in determining fair value is greatest for instrumems categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, lhe level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

As of December 31, 2023 , the Company held no investments.

The following table represents the change in Level 3 fair value as of December 31, 2023:

| h11nge in Level 3 Fnir Value |            |
|------------------------------|------------|
| Balance, January I, 2023     | 827,749    |
| Net gain on fi rm investment | 163,838    |
| Distribution of securities   | (99 1,587) |
| Balance, December 31 , 2023  |            |

The Company's Level 3 investment has been valued using unadjusted third-party transactions and unadjusted historical financial information. As a result. there were no unobservable inputs that have been internally developed by the Company to determine fair va lue.

#### **4. TRANSACTIONS WlTH RELATED PART IES**

At December 31, 2023, the Company had a service agreement with GaJaxy Digital Services LLC (''GDS"), an affiliated company. The affiliate provides office space, compensation expenses, professional and consulting fees, and other services pmsuant to a service agreement. The Company is not required to make any payments to GD under the agreement.

GD paid additional expenses outside of the service agreement of \$582,845 on behalf of the Company that are refle ted as expenses on the statement of operations. The Company paid GD \$728,327 due lo balances owed to them attributable to expenses paid by them during the prior year and current year on behalf of the Company. As of December 31, 2023 , the Company owes GD \$149 628 th11t is reflected on the statement of financial condition.

ln May 2023, the Company entered into a loan agreement with the Parent for \$1 S.000 at a rate of 5%. In June 2023, the Company fully repaid the loan a11d interes of \$15 066 to the Parent.

ln June 2023, lhe Company made an in-kind distribution of its investment in not readily marketable securities to the Parent valued at \$991,587.

ln relation to a legal dispute against the Company the Company was indemnified by Ga laxy Digital Capital Management LP ("GDCM"), an affiliated company. As of December 31. 2023 1he Company has a receivable from GDC l for the legal settlemenl with in Due from affiliate - legal settlement for \$575.761.

The terms of these arrangements may not be the same as those that wou ld otherwise exist or result from agreements and transactions among unrelated parties.

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# **Galaxy Digital Partners LLC**

otes to the taternent of Financial Condition December 31, 2023

### **5. REGULATORY REQUIREMENTS**

The Company is subject to EC Uniform Net Capital Rule l 5c3-1 under the ecurities 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 1- to I. At December 31 2023. the Company had net capital of approximately \$2 565,597 which exceeded the required net capital of\$100,000 by approximately \$2,465,597.

The Company does not hold customers' cash or securities: therefore, it has no obligations under EC Rule I 5c3-3 under the ecurities Exchange Acr of 193-l.

### 6. **ONCENTRATIO OF CREDIT RI K**

The Company routinely assesses the financial strength of its customers and considers an allowance for anticipated losses. For the year ended December 31, 2023. there was no allowance for credit loss. As of December 31, 2023, two customer accounted for 97% of accounts receivable. During the year ended December 31, 2023, three counterparties accounted for 86% of total revenues.

### 7. **OMMITMENT AND ONTINGENCIES**

In the ordinary course of business, the ompany may be threatened with, named as defendants in. or made partie to pending and potential legal actions. The Company does not believe that the ultimate outcome of these and any outstanding malters will have a material effect upon irs business, results of operations or financial condition. As of December 31. 2023, in relation to a legal dispute against the Company where the Company was fully indemnified by its affiliate. the Company accrued a liability within Payable for legal settlement and a receivable within Due from affiliate - legal settlement in the amount of \$575,761 .

The Company has provided standard representations for agreements and customary indemnification for claims and legal proceedings. Insurance has been purchased to mitigate certain of these risks. Generally, there are no stated or notional amounts included in these indemnifications and the contingencies triggering the obligation for indemnification are not expected to occur. Furthennore, counterparties to the e transactions often provide comparable indemnifications. The Company is unable to develop an stimate of the maximum payout under these indemnifications for several reasons. In addition to the lack of a stated notional amount in a majority of such indemnifications, it is not possible to predict the nature of events that would trigger indemnification or the level of indemnification for a certain event. The Company believes, however, that the possibility of making any material payments for these indemnifications is remote. As of December 31. 2023, there was no liability accrued under these arrangements.

#### **8. B EQ ENT EVENT**

The Company has e aluated subsequent events through March 8, 2024, and determined that there have been no events that ha e occurred that would require adjustments to or disclosures in the financial statements except for the following:

On February 23, 2024, the Company disbursed \$575,761 to settle the legal dispute in which it was indemnified by its affiliate, and received reimbursement of\$575,76 I from its affiliate on February 28. 2024.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.