BitGo’s Lawsuit Against Galaxy Digital Over $1.2B Merger Dismissed

Crypto investment firm Galaxy Digital will not have to pay damages over its abandoned tie-up with asset custodian BitGo, after a lawsuit against the company was dismissed.

Announcing that a court had decided to dismiss the claim, Galaxy said it was “pleased” with the outcome.

“Now is the time for all of us to work together and focus on the task at hand: Upgrading the global financial system in a manner that promotes innovation and protects investors and consumers alike,” the company said in a tweet.

Galaxy, which is led by Wall Street stalwart Mike Novogratz, called off its $1.2 billion proposal to acquire BitGo last year. The company said the decision came after its takeover target failed to provide audited financial statements by a certain date.

But BitGo said the merger agreement was not scheduled to expire until the end of the year, and said it would sue Galaxy.

Last week, a Delaware Chancery Court vice chancellor said that Galaxy had a “valid basis” to terminate the proceedings, owing to BitGo’s failure to deliver the financial statements.

"BitGo plans to appeal the Court’s decision, and continues to believe that Galaxy wrongfully terminated the agreement," a BitGo spokesperson told Decrypt in an emailed statement.

The abortive Galaxy-BitGo merger

Galaxy first disclosed its intention to acquire BitGo in a $1.2 billion deal in May 2021. Had it successfully closed, the merger would have been one of the biggest in the crypto industry.

By May 2022, Galaxy was claiming that it expected to finalize the acquisition by the end of the year.

Then in August, it said the deal would not go ahead. The announcement came just a week after Galaxy had reported $554 million in unrealized losses on its crypto holdings for the second quarter of that year.

In September, BitGo filed a complaint with the Delaware Chancery Court, seeking damages of $100 million and claiming that Galaxy’s losses and its efforts to go public were the real reasons why it dropped the deal.

Since then, both firms have pursued other acquisitions of their own. Galaxy won a bid for another crypto custodian, GK8, which was put up for auction as part of Celsius’s proceedings.

Meanwhile, BitGo last week signed a letter of intent to acquire its rival Prime Trust.