In late 2015, Ethereum co-founder Vitalik Buterin sold half a million Ethereum (ETH) to Galaxy Digital CEO Mike Novogratz in an over-the-counter transaction. He sold each ETH for just $0.99.
Today that nest egg would have been worth $229 million.
Novogratz explained how the sale happened during an interview with YouTube channel Nugget’s News. He said that he met up with college roommate Joseph Lubin to discuss purchasing a 25% stake in his venture studio ConsenSys—the firm, incidentally, also funds an editorially independent Decrypt.
Novogratz was inspired by Lubin’s belief in Ethereum. He was sold on the idea that it could be used to disrupt a variety of industries. But when buying a stake in ConsenSys became more complicated than Novogratz initially thought, he figured he should at least buy some Ethereum.
“I was at least intelligent enough to say I’m not leaving until I buy some of the ethers,” he said.
At the time, Ethereum was tricky to buy since few exchanges, particularly in the US, supported it. It was trading at around $0.95 at the time.
Novogratz said, “I called him [Ethereum cofounder, Vitalik Buterin] up; I had met him once at a dinner. He remembered me but didn’t know me. He thought it was good for the community to have a Wall Street guy buying, so I bought half a million ether at $0.99 maybe, $0.98. He changed the price on me at the last minute from 98 to 99 because I had waited too long, and the price went up.”
He added, “And then I really became much more of a crypto maniac.”
Novogratz on buying Bitcoin
By that point, Novogratz already owned some Bitcoin. He said that he first started buying Bitcoin at around $95 but that it was pure speculation. He then called up Dan Morehead, CEO of investment firm Pantera, and asked him to look into it.
“After two weeks, he called me back and said, ‘Dude this is going to change the world for this and this reasons, coolest thing I’ve found, thanks so much,’” Novogratz said.
The three of them decided to invest. Morehead started with a purchase of 30,000 Bitcoin. “We were like, I’ll have 30,001 because we couldn’t let him have more than we had. We roughly all bought the same amount,” Novogratz said. That amount of Bitcoin would be worth $490 million today.
But then he made a mistake of talking about it publicly. “I say mistake because I didn’t know the press was there. The next day I was on the cover of the Financial Times. The only time I’ve ever been on the cover of the Financial Time,” he said. “Fortress’s Novogratz says Bitcoin going to $1,000,” was the headline, said the former Wall Street investor.
Novogratz pointed out that it did indeed reach that price point. “I actually wanted to sell it at $1,000. To sell it and buy a jet,” he said, adding, “My partner, [Peter] Briger, wouldn’t let me and he was so adamant, he actually went out and bought Bitcoin for Fortress’s balance sheet.” Since the company was buying, Novogratz said, he couldn’t be seen to be selling—that would be bad for appearance’s sake.
“I’m doing you a favor,” Briger reportedly told him, “This is going to go so much higher, we don’t want to sell it ever.”