In April, Mike Novogratz, the former banker of the prestigious investment bank Goldman Sachs  (GS) – Get Goldman Sachs Group, Inc. Report was in Miami for the summit of the crypto sphere dedicated to bitcoin. 

In this kind of festival, meant to celebrate bitcoin and cryptocurrencies as a whole, Novogratz was a star. 

The festival-goers were happy to pose for photos with him and did not hesitate to post them on social media. The billionaire and chief executive officer of Galaxy Digital is one of the hottest bitcoin and crypto evangelists. In the crypto sphere, he is part of a closed circle of names that includes billionaires Elon Musk, Michael Saylor, Mark Cuban, Kevin O’Leary, Bill Miller, Sam Bankman-Fried, Jack Dorsey, Brian Armstrong, Changpeng ‘CZ’ Zhao , brothers Tyler and Cameron WInklevoss, and investor Anthony Pompliano who can influence market prices with a single tweet.

The crypto galaxy observes what they say, what they do. They are sort of the oracles. In Miami, Novogratz showed love for bitcoin as well as for Luna, one of the tokens of the Terra ecosystem. The cryptocurrency was then at the top of its game: on April 5, the prices of Luna had just reached $119.23, an all-time high.

Luna Tattoo

“I’m probably the only guy in the world that’s got both a bitcoin tattoo and a Luna tattoo,” the former banker said at the last Bitcoin 2022 conference in Miami. 

To be fair, the investor had also stated during the same conference that there were significant risks associated with UST.

The love affair between Novogratz and Luna had its beginning in January when the billionaire surprised his world by unveiling a tattoo of Luna. But the billionaire had invested in Luna a year earlier, in January 2021, according to a source close to the matter.

“I’m officially a Lunatic!!! Thanks @stablekwon And thank you my friends at Smith Street Tattoos,” Novogratz posted on Twitter, on January 4, with a photo showing his new tattoo.  Granted, the former banker didn’t offer financial advice, but his tattoo and tweet were an indirect way of supporting Luna, much like celebrities showing off their new NFTs.

To a Twitter user who doubted the tattoo was on him, Novogratz then posted a second photo showing his face.

“There is no way that is you,” the user said.

Five months after this proof of love, the price of Luna collapsed. The cryptocurrency was worth $0.0000914, down 99.5%, according to CoinGecko, as of time of writing. Its market value fell from over $41 billion to some $623 million. In other words, Luna investors have lost almost everything. 

This is also the case for investors in UST, the sister token of Luna with which the crypto operated in tandem. UST has lost its peg to the dollar and is currently worth $0.143576. Its market value fell from $18.770 billion on May 9 to $1.613 billion.

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Both coins saw the collapse over the weekend of the algorithmic system that UST’s dollar peg is backed by, reducing supply, and vice versa, instead of reserves made up of traditional assets like cash.

Their rout caused further chaos in a cryptocurrency market already on high alert due to fears of economic recession. The foundation behind Luna had to use its bitcoins to buy UST in order to limit the damage, but it was too late because the panic had already spread to the entire market.

Novogratz’s Fortune Has Shrunk by $6 Billion

Novogratz, very present on social media, has not posted a message since May 8. He has almost disappeared, and his absence is widely commented on Twitter.

“Not a single tweet from Novogratz yet,” one Twitter user said on May 13. “It’s bad being exposed to a ponzi but when you get that ponzi tattoo’d on your skin for life you are down horrendously bad.”

“Has anyone checked on @novogratz?🌕🐺” another user asked.

“Send him this https://cleanslatelaser.com he might need it for a thing,” another user commented.

Galaxy Digital did not respond to a query from TheStreet regarding Novogratz. 

The company, however, tried to reassure the markets by claiming to have enough cash.

“The company remains in a strong capital and liquidity position and is well-positioned for long-term growth,” Galaxy Digital said in a press release on May 13. “The company will continue to manage the pace of investment to consider the macroeconomic backdrop as it has throughout its history, and our experienced management team continues to believe there are significant opportunities for Galaxy Digital as we navigate current market conditions.”

The firm added that: “the company’s treasury does not utilize algorithmic stablecoins,” like UST. 

Galaxy Digital said it has a liquidity position of approximately $1.6 billion, including $800 million in cash and over $800 million in net digital assets, with the majority of net digital assets in non-algorithmic stablecoins.

But it expects to post a loss of approximately $300 million in the quarter that will end on June 30, compared to March 31.

If the company is relatively spared, this is not the case of the personal fortune of Novogratz. The billionaire saw his fortune melt from $8.5 billion on paper to $2.5 billion, according to Bloomberg Billionaires Index.