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BitGo's Suit Against Galaxy Digital Over Canceled $1.2B Purchase Dismissed by Delaware Judge
Crypto custodian BitGo had agreed to a sale to Galaxy Digital in May 2021, but Galaxy pulled out of the deal last August amid the industry’s sustained bear market.
Updated Jun 12, 2023, 9:00 p.m. Published Jun 12, 2023, 3:51 p.m.
A federal judge has sided with Galaxy Digital (GLXY.TO) – the crypto merchant bank led by Mike Novogratz – in its decision to terminate its $1.2 billion acquisition of crypto custodian BitGo.
Delaware Chancery Court Vice Cchancellor James Laster ruled last week that Galaxy had a “valid basis” to end the deal because BitGo provided Galaxy with "non-compliant" documents pertaining to its financial health.
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"There are no facts alleged that could make it reasonably conceivable that the exercise of the termination right was inconsistent with the implied covenant of good faith and fair dealing," Judge Laster said in the ruling.
"BitGo plans to appeal the Court’s decision, and continues to believe that Galaxy wrongfully terminated the agreement," said BitGo in response to the judge's decision.
The two initially agreed to a deal in May 2021, with Galaxy looking to become a one-stop shop for prime brokerage services geared toward institutional investors. With the crypto bear market in full swing, Galaxy ultimately called off the merger in August 2022, citing Bitgo’s withholding of audited financial statements.
BitGo subsequently sued for $100 million in damages, calling Galaxy’s reasoning “absurd,” and suggesting Galaxy pulled out because it could no longer afford the purchase after racking up hundreds of millions in losses during the bear market.
Updated (20:15 UTC, June 12, 2023): Added response from BitGo.
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