Digital asset custody, trading and financing platform BitGo is seeking $100m in damages after Galaxy Digital terminates its merger agreement.
Galaxy Digital terminated its $1.2bn proposed acquisition of BitGo, which was announced in May 2021. Galaxy stated the reason was due to BitGo failing to provide its audited financial statements for the year of 2021, which goes against the agreement details, it said.
BitGo has since responded to the termination and plans to “hold Galaxy legally accountable” and seek over $100m in damages.
It claimed Galaxy made an improper decision to terminate the agreement, which was not scheduled to expire until December 31 2022, at the earliest, and to not pay the $100m reverse break fee it had promised in March 2022 in order to “induce BitGo to extend the merger agreement.”
BitGo founder and CEO Mike Belshe said, “BitGo’s business has continued to grow and its operational and strategic outlook remain strong. BitGo ended 2021 with over $64bn in assets in custody. Client growth was strong and BitGo grew by over 3 times year over year and client growth continues into 2022, which underscores the need for BitGo to remain focused on our mission.
“We have an expanding pipeline of product launches and we are dedicating even more resources to building institutional-grade products and services for our clients and the industry. We are now turning 100% of our focus to these exciting initiatives for the benefit of our clients, shareholders and employees. I have never been more bullish about our future.”
BitGo said it has hired litigation powerhouse Quinn Emanuel to take appropriate legal action.
Quinn Emanuel partner R. Brian Timmons said, “The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd.
“BitGo has honoured its obligations thus far, including the delivery of its audited financials. 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. Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more.”
In the announcement about terminating the merger, Galaxy CEO and founder Mike Novogratz said, “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 is a digital asset and blockchain platform that provides institutions, startups and qualified individuals with access to crypto. Its services include trading, asset management, investment banking, mining, and ventures.
The company said it is still pursuing a reorganisation and domestication to become a Delaware-based company and list on the Nasdaq.
In other crypto news, the United Nations recently called for the halt of crypto rising in developing countries. It has released three policy briefs that explore the risks and costs of crypto.
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