- BitGo has been given a renewed chance to sue Galaxy Digital over their failed $1.2 billion merger
- Delaware’s Supreme Court has overturned a previous decision that dismissed BitGo’s lawsuit regarding financial statement definitions
- BitGo has sued Galaxy Digital in 2022 after the firm scrapped the merger just before its completion in 2021
Cryptocurrency custodian BitGo was recently given a renewed chance to pursue legal action against financial services firm Galaxy Digital concerning their failed $1.2 billion merger. Delaware’s Supreme Court overturned a previous decision that had dismissed BitGo’s lawsuit on the basis of the definition of financial statements BitGo was said to have withheld. The custodian sued Galaxy Digital in 2022 when the latter scrapped the merger just days before completion the year prior.
Galaxy Digital Pulled Out of Merger
The two companies struck a deal in May 2021, which was meant to enable BitGo to extend its digital asset infrastructure services to a broader array of corporate, institutional, and high-net-worth clients. However, the merger faced significant challenges, and on the brink of the deal’s completion, Galaxy Digital issued a press release announcing its decision to terminate the acquisition.
The firm cited BitGo’s inability to provide audited financial statements for 2021 by the stipulated deadline of July 31, 2022, as the primary reason for the termination, emphasizing that no termination fee was owed. BitGo responded vehemently, filing a press release just hours later asserting its intention to hold Galaxy Digital accountable for what it described as an improper termination of the agreement.
At the time, R. Brian Timmons, counsel for BitGo from Quinn Emanuel, stated that Galaxy Digital either owed BitGo a $100 million termination fee or bad faith damages which could amount to more. This fee had been promised in March 2022 as an inducement to extend the merger agreement, but when it didn’t arrive, BitGo took legal action.
Definition of “Financial Statements” Key
Delaware Chancery Court Vice Chancellor J. Travis Laster ruled last June that Galaxy had a “valid basis” to renege on the agreement because BitGo gave the firm “non-compliant” financial documents. Following BitGo’s appeal, however, the Delaware Supreme Court identified ambiguities in the merger agreement regarding the definition of “financial statements.” The Court recognized that both BitGo and Galaxy Digital had reasonable interpretations of the required documentation, leading to the reversal of the initial ruling.
This decision breathes new life into BitGo’s lawsuit, allowing the company to challenge Galaxy Digital’s termination of the merger agreement and seek financial recompense.
