BitGo – a digital asset custodian – has announced it will seek over $100 million in damages from investment management firm Galaxy Digital for allegedly canceling an acquisition agreement.
Yesterday Galaxy Digital, run by billionaire Mike Novogratz, announced that it would terminate the proposed deal worth approx $1.2 billion to acquire BitGo. The firm stated that BitGo failed to deliver its financial statements for 2021 by July 31, 2022, as part of the agreement; hence, no fee termination was applicable.
“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions,”
Galaxy CEO Novogratz had said.
According to BitGo, the acquisition agreement had an expiry till the end of the year; therefore, Galaxy was in breach of the contract. It has employed the law firm Quinn Emanuel to see out the legal proceedings.
“It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco,”
said R. Brian Timmons, a partner at Quinn Emanue in a statement released on Monday.
“The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd.”
Galaxy first announced in May last year that it would acquire BitGo. Had the deal gone through, it would’ve been one of the biggest deals in the crypto space, adding more than 400 new global clients to Galaxy’s books.
The company had also said in an SEC filing in May that it would “issue incremental shares of its common stock to BitGo’s shareholders in exchange for BitGo’s net digital assets at close.“
However, as things stand, the deal couldn’t materialize after being in the funnel for more than a year. It’s still unclear if the crypto market downturn had anything to do with the termination, with valuations going berserk.
