The Custodian of Digital Assets BitGo said it planned to ask for more than $100 million in damages from Galaxy Digital, claiming the investment firm owed the funds as part of a “reverse breakup fee” in its decision to terminate a takeover deal.
In a blog post on Monday, BitGo referred to Galaxy’s actions as “inappropriate” in alleging a breach of contract to abandon a digital asset custodian acquisition deal. BitGo has enlisted the services of law firm Quinn Emanuel to take legal action against Galaxy for failing to pay a “$100 million reverse breakout fee it had promised in March 2022.”
According to Galaxy, BitGo did not provide the 2021 audited financial statements by July 31, 2022 as part of the acquisition agreement, a claim that Quinn Emanuel’s partner, R. Brian Timmons, denied:
Mike Novogratz and Galaxy Digital’s attempt to blame the termination on BitGo is absurd […] Either Galaxy owes BitGo a $100 million termination fee as promised or has acted in bad faith and faces damages of that amount or more.”
Galaxy announced its intention to acquire BitGo in May 2021 as part of plans to go public in the United States. Following a delay late in the first quarter of 2022 during which Galaxy CEO Mike Novogratz said the firm had “tweaked the deal a bit,” the acquisition was expected to take place between the second and fourth quarters. of 2022.
“We believe BitGo’s claims are without merit and will vigorously defend ourselves,” a Galaxy spokesperson told Cointelegraph. “BitGo failed to provide certain financial statements that Galaxy needed for SEC filing. Galaxy’s Board of Directors then made the decision to exercise its contractual right of termination.”
It’s not clear if the recent market downturn was a factor in the deal’s failure. Galaxy originally said it planned to pay approximately $1.2 billion in stock and cash in 2021. BitGo said on Monday that it had more than $64 billion in assets under custody at the end of 2021 and “client growth continues in 2022.”
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