Cryptobank Galaxy Digital entered the capital of ParaFi Capital to invest in the DeFi sector

The head of the bank, Mike Novogratz, believes that fullfledged DeFi applications will lead to the decline of the intermediary business in the financial sector. For this reason, Galaxy entered the capital of the investment company ParaFi, the portfolio of which also includes DeFi projects.

Billionaire Mike Novogratz’s cryptocurrency bank GalaxyDigital has become a minority shareholder in investment company ParaFi Capital, which specializes in fintech and blockchain ecosystems. In a press release, ParaFi said the new partners will join forces to invest in the DeFi sector.

Speaking to Bloomberg, Novogratz said that the DeFi sector is now dominated by scammers and getrichquick schemes that cast a shadow over the entire cryptocurrency industry. He noted that at the peak of the popularity of ICOs, the situation was similar: the excitement around placements resembled a fever, therefore, many investors made stupid decisions.

The billionaire noted that with the decline in the value of DeFitokens, the excitement around this market begins to subside. Just like the head of cryptocurrency exchange Binance, Changpeng Zhao, Novogratz considers that the very concept of DeFi is viable. Moreover, fullfledged decentralized applications will lead to the decline of the intermediary business in the financial industry.

We want to be at the forefront of the industry. I think this [DeFi] is a really important part of the ecosystem

Mike Novogratz

That is why Galaxy Digital decided to enter the capital of ParaFi Capital. It is not known exactly how much money the cryptocurrency bank invested in the company, but Novogratz noted that Galaxy’s share in ParaFi does not exceed five percent of its capital.

ParaFi Capital was founded in 2018 by the former director of investment fund Kohlberg Kravis Roberts (KKR) Ben Foreman. In the same year, ParaFi started investing in projects in the DeFi sectorFor instance, at the end of August 2020, ParaFi was managing assets worth over $ 100 million.

Recall that the total net profit of Galaxy Digital bank in the second quarter of 2020 amounted to $ 38 million, which is significantly less than $ 113.8 for the same period last year. Nevertheless, the company managed to reverse the negative trend and reach profit. At Galaxy, this is associated with the growth of investment banking and trading.

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