Digital asset custodian BitGo has announced it will seek $100 million or more in damages from crypto investment firm Galaxy Digital for pulling out of a deal to acquire it.
Galaxy Digital earlier today said it would terminate its proposed deal to acquire BitGo for $1.2 billion. The firm, run by billionaire Mike Novogratz, said termination of the deal would not result in any fee.
BitGo is now seeking damages because the merger agreement was not scheduled to expire until the end of this year. It has hired law firm Quinn Emanuel to sue Galaxy Digital.
“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 with Quinn Emanuel, in a Monday statement.
“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.”
Galaxy Digital last week reported a Q2 loss of over half a billion dollars. The New York firm said the numbers were due to “unrealized losses” on digital assets.
BitGo’s “Luna fiasco” comment was a reference to Terra’s collapse, a popular blockchain that imploded in May, losing billions of dollars for investors. Mike Novogratz was an outspoken fan of Terra and its native cryptocurrency, Luna.
Galaxy first said it would acquire BitGo in May last year. The monster deal would have been one of the biggest in the crypto industry, bringing Galaxy about 400 new global clients.
But the deal never materialized, and today Galaxy said it was pulling the plug “following BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement.”