Following the GK8 acquisition, Galaxy Digital plans to integrate the service with its GalaxyOne prime brokerage platform.
According to reports, Galaxy Digital has completed the $44 million acquisition of GK8, an institutional self-custody platform. The GK8 acquisition comes more than two months after Galaxy Digital secured the rights to buy the then-Celsius asset.
Following the acquisition, GK8 solutions would still be accessible to the market. However, Galaxy Digital plans to integrate the self-custody platform’s tech with its own incoming prime brokerage platform, GalaxyOne.
Potential Benefits of Galaxy Digital GK8 Acquisition
By building out GalaxyOne, Galaxy Digital could offer a range of enhanced financial services for institutions. These services include lending, trading, derivatives, cross-portfolio margining, and several other custodial options. Furthermore, Galaxy’s purchase of GK8 also sees the blockchain leader gain an office in Tel Aviv, Israel, in addition to a 40-person team. This team includes the founders who have joined Galaxy to spearhead its custodial tech initiative.
Weighing in on the development, Galaxy Digital founder and chief executive officer Mike Novogratz said in a press release:
“Investor demand for innovative and secure custody services continues to grow, and the acquisition of GK8 enhances our efforts to offer clients best-in-class cold storage solutions along with cutting-edge wallet technology. In addition to continuing to offer highly valuable custody technology to clients, the GK8 team will play a pivotal role in our evolution to offer a full-service financial platform for digital assets.”
GK8’s solutions cater to mainstream finance and crypto-centric establishments, including banks, hedge funds, and brokerage client eToro. Founded in 2018, the infrastructure grants clients access to a suite of blockchain-supported services and endeavors. These include decentralized finance (DeFi) networks, staking, trading services, and non-fungible token (NFT) support.
Users can access GK8’s services via a multi-party computation (MPC) vault, an automated crypto storage method. This method functions by splitting the requisite private key to access the assets between countless co-signers and a cold vault.
Cold vaults keep assets safe by remaining offline. Since there is no connection to the internet, hackers cannot access private keys. However, despite being more secure, transactions manually processed via cold wallets are slower. Furthermore, most products on the market need to go online eventually to get blockchain-validated data for transaction verification.
In a media session, GK8 chief executive Lior Lamesh explained that the platform has developed patented cryptographic techniques. These techniques facilitate the creation, signing, and sending of transactions by GK8’s cold vault to the blockchain without an internet connection.
GK8 was among several assets put up for sale by Celsius following its bankruptcy last July. The insolvent crypto lender had acquired GK8 for $115 million in November 2021 but sold it to Galaxy for $44 million. As a result, Galaxy picked up the institutional self-custody platform at a discount of more than 60%. The blockchain company previously backed out of a $1.2 billion deal with BitGo, which resulted in a lawsuit from the latter.