Investment of $200 million by Galaxy in MoonPay for liquidity
MoonPay has secured a $200 million revolving credit facility from Galaxy, a leading cryptocurrency-focused financial services firm, to address sudden liquidity demands, Ivan Soto-Raiyt, co-founder of the payment service, shared with The Block.
This credit line was a response to challenges encountered during the launch of the meme token associated with former U.S. President Donald Trump. MoonPay had to expeditiously raise $160 million due to an unusually high demand during weekends, a period when traditional banks were closed. In this critical situation, Galaxy and Ripple extended assistance.
Soto-Raiyt explained that this credit line serves as a short-term means to access capital during periods of extreme liquidity need, similar to the TRUMP meme coin incident. The line does not carry long-term debt obligations.
Upon launching the meme token, MoonPay dealt with massive transaction volumes. The company's liquidity was tied up in accounts with BlackRock due to holidays. However, with Galaxy and Ripple's support, the service handled the influx of users and gained over 750,000 new clients.
Soto-Raiyt also noted a dramatic surge in demand for cryptocurrencies following the November 2024 U.S. presidential elections, with average daily volumes nearly doubling (+98%).
This is MoonPay's first experience working with credit lines. Negotiations with Galaxy took several weeks, and the final agreement was signed on March 19. Details of the deal remain undisclosed, but the company expresses satisfaction.
In January 2023, Congress expressed interest in the ethics of Donald Trump's cryptocurrency initiatives, and in February 2023, Public Citizen urged the Department of Justice and the Office of Government Ethics to investigate the TRUMP project due to potential breaches of corruption laws.
Incorporating relevant details from the Enrichment Data, the new credit facility could significantly help MoonPay manage liquidity fluctuations, common in the volatile cryptocurrency market. This backup funding allows companies to swiftly adapt to market changes, including a potential increase in service demand like crypto payment processing. The specific application of this credit line to the Trump meme coin is not elaborated upon in the provided sources.
The new credit facility, secured by MoonPay from Galaxy, a leading cryptocurrency-focused financial services firm, can help manage liquidity fluctuations in the volatile industry. By providing a short-term means to access capital during extreme liquidity needs, as seen during the launch of the Trump meme coin, this facility allows companies like MoonPay to swiftly adapt to market changes, especially in the technology sector, where sudden demand for services such as cryptocurrency payment processing can occur.
