When you entrust your money to a brokerage firm, you need to be confident that the firm is secure and resilient under all conditions.
Galaxy Ark is not a bank. As a self-clearing broker-dealer, we are not permitted to hold “hold-to-maturity” securities (which are not marked to market). Additionally, we are not allowed to engage in unsecured long-term lending.
The only type of lending we are permitted to do is margin lending, which is fully collateralized by readily marketable securities.
Our real-time margin system continuously marks all customer holdings to market. All orders undergo a credit check before execution, and if there is insufficient margin, positions are automatically liquidated.
All positions are marked to market daily, and the resulting payables/receivables are automatically adjusted with external sources.
Galaxy Ark invests customer cash in short-term instruments with maturities not exceeding a few months. We do not hold significant positions in OTC securities or derivatives, nor do we invest in collateralized debt obligations (CDOs), mortgage-backed securities (MBS), or credit default swaps (CDS).
How We Handle Customer Assets
We segregate a portion of customer assets (approximately 12% as of July 22, 2025) into special reserve or custodial accounts designated for Galaxy Ark customers. This protection—referred to by the SEC as “reserves” and by the CFTC as “segregation”—is a fundamental principle of securities and commodities brokerage. Proper segregation benefits customers by allowing the return of assets in the event of a broker-dealer default or bankruptcy, provided customers have not borrowed funds or stocks and do not hold futures positions.
As standard practice, Galaxy Ark deposits its own funds into these reserve and segregated accounts to ensure sufficient capital is available to protect all customers.
Typically, the majority of customer assets (about 88% as of July 22, 2025) are invested in U.S. short-term Treasuries and reverse repurchase agreements, where the collateral received is also in the form of U.S. Treasuries. Our investment strategy focuses on short-term government securities and repos with a weighted average maturity of 30–40 days and a maximum of one year. This allows us to match investments with customer withdrawal needs and avoid the risks associated with long-duration holdings, such as price volatility and potential losses. Unlike banks, which can hold securities at amortized cost, as a self-clearing broker-dealer, we must mark customer fund investments to market daily.
Although CFTC regulations permit it, Galaxy Ark does not currently invest any customer assets in money market funds due to concerns about the credit risk of foreign sovereign debt.
Securities Accounts Without Borrowing of Cash or Securities
For customers who do not borrow cash or securities, their assets are protected as follows:
Most funds are invested in U.S. Treasuries, including direct investments in short-term and intermediate-term Treasury securities, and in reverse repurchase agreements backed by U.S. government bonds. These trades are conducted with third parties and cleared through a central clearinghouse (Fixed Income Clearing Corporation, a DTCC subsidiary). The clearinghouse marks collateral to market daily to ensure Galaxy Ark holds sufficient collateral value. The collateral remains the property of Galaxy Ark and is stored in segregated reserve accounts at custodial banks dedicated to customer protection. U.S. Treasuries may also be pledged to support margin requirements for customer options positions.
Customer cash in reserve accounts is calculated on a net basis, reflecting long balances and loans made to others. If a customer has a margin loan, the loan is fully collateralized by securities valued at 140% of the borrowed amount. While regulations allow borrowers a few days to correct margin deficiencies, Galaxy Ark does not permit this. Instead, we monitor margin in real-time and automatically liquidate positions to repay loans, ensuring compliance without endangering Galaxy Ark or its customers.
Some funds are kept in special reserve accounts for Galaxy Ark customers at major U.S. banks. These deposits are distributed across multiple investment-grade banks to reduce concentration risk. No single bank holds more than 5% of Galaxy Ark’s customer assets. As of July 2025, Galaxy Ark holds deposits across several major banks (subject to change at Galaxy Ark’s discretion without public disclosure of specific amounts). Some banks are subsidiaries or branches of foreign financial institutions and are regulated by the Federal Reserve and the Office of the Comptroller of the Currency (OCC).
Daily Reserve Calculations and Enhanced Protection
The U.S. SEC requires broker-dealers to perform weekly reserve calculations to ensure customer funds and securities are properly segregated from proprietary assets. To enhance asset protection, Galaxy Ark applied for and received approval from FINRA to perform daily reserve calculations instead of weekly. Since December 2021, Galaxy Ark has conducted daily calculations and made reserve adjustments accordingly to safeguard client assets. Moving from weekly to daily reconciliations is part of our effort to provide the highest standard of customer protection.
Fully paid customer securities are protected in clearly designated segregated and custodial accounts. Galaxy Ark reconciles customer holdings daily to ensure these securities are properly held at custodial and depository institutions.
FDIC-Insured Bank Deposit Sweep Program
Through participation in an FDIC-insured bank deposit sweep program, eligible Galaxy Ark customers can receive insurance coverage of up to $5 million (for individual accounts) or $10 million (for joint accounts) from the Federal Deposit Insurance Corporation (FDIC), in addition to the existing $250,000 coverage from the Securities Investor Protection Corporation (SIPC). This brings the total coverage to $5.25 million for individual accounts and $10.25 million for joint accounts.
Customers continue to earn competitive interest rates on idle cash in their Galaxy Ark accounts. Every day, Galaxy Ark sweeps each participating customer’s excess cash into one or more banks, with no more than $246,500 deposited per bank to stay within FDIC coverage limits. Any cash balance exceeding $5.25 million remains protected under SEC Rule 15c3-3 and is backed by Galaxy Ark’s $16.9 billion in equity capital.