Galaxy Digital wins case against BitGo over $1.2 billion deal cancellation.
A federal judge in Delaware has ruled in favor of Galaxy Digital, the crypto merchant bank led by Mike Novogratz. The ruling pertains to the termination of a $1.2 billion acquisition deal with BitGo. The court dismissed BitGo’s lawsuit, stating that Galaxy had a valid reason for ending the agreement due to non-compliant financial documents provided by BitGo.
During the ruling, Delaware Chancery Court Vice Chancellor James Laster stated, “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.”
The agreement between BitGo, a renowned crypto custodian, and Galaxy Digital was entered into in May 2021, with Galaxy aiming to establish itself as a comprehensive prime brokerage service for institutional investors. However, Galaxy Digital cancelled the merger in August 2022 due to BitGo’s failure to provide audited financial statements amid bearish crypto market conditions.
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BitGo intends to appeal the court’s decision, believing that the termination of the agreement was wrongful and unfounded. BitGo suggested that the cancellation resulted from Galaxy’s own financial losses during the bear market.
The dismissal of BitGo’s $100 million lawsuit is significant for the legal battle between the two crypto entities. The ruling supports Galaxy Digital’s decision to terminate the acquisition deal and emphasizes the importance of compliance and accurate financial disclosure in high-value transactions.
As BitGo plans to appeal the court’s decision, the case continues to be closely watched within the crypto industry. The outcome will have implications for future legal disputes and contractual interpretations in the rapidly evolving crypto market.
This ruling highlights the importance of transparency and due diligence in major acquisitions. Compliance with regulatory requirements and providing accurate financial information are essential to build trust and ensure the successful execution of such deals.
As the crypto industry continues to mature, legal disputes and regulatory scrutiny are expected, and this case underscores the significance of adhering to contractual obligations, fostering transparency, and aligning business strategies with evolving regulatory frameworks.
It is worth noting that this development comes just a week after BitGo revealed plans to expand its offerings by signing a letter of intent to acquire 100% of the equity of Prime Core Technologies, Inc., the parent company of Prime Trust. The move would make BitGo a pioneer, as it is the first international digital asset firm to offer a full suite of solutions for fintech platforms.
