- In May 2021, Galaxy Digital announced an agreement to purchase BitGo for a valuation of US$1.2 billion.
- On August 15, 2022, Galaxy Digital terminated the acquisition agreement with BitGo.
- BitGo publicly announced its lawsuit against Galaxy Digital seeking more than US$100 million in damages.
For those who don’t remember, in May 2021, Galaxy Digital, a cryptocurrency-oriented financial services company, ad an agreement to buy BitGo for a valuation of US$1.2 billion.
At the time, Michael Novogratz, CEO and founder of Galaxy Digital, said that:
“BitGo acquisition establishes Galaxy Digital as a one-stop shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology“.
Nevertheless, on August 15, 2022, Galaxy Digital rescinded the acquisition agreement with BitGo. Apparently within the agreement it was established that BitGo had to deliver the 2021 audited financial statements before July 31, 2022, and therefore, Galaxy Digital claims to have exercised its right to withdraw from the agreement.
Following Galaxy Digital’s exit from the deal, BitGo issued a statement informing its intentions to hold Galaxy Digital legally responsible.
“Mike Novogratz and Galaxy Digital’s Attempt to Blame BitGo for Termination Is Absurd”, said R. Brian Timmons, partner of Quinn Emanuel in the release.
“BitGo has fulfilled its obligations thus far, including the delivery of its audited financial statements. It is common knowledge that Galaxy reported a loss of $550 million last 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 amount or more. “.
BitGo seeks US$100 million in damages and perjury
In this context, BitGo reported on Twitter that it would have filed the lawsuit on Monday, September 11.
“Yesterday afternoon, BitGo filed a lawsuit against Galaxy Digital seeking damages in excess of $100 million stemming from Galaxy’s wrongful repudiation and intentional breach of its merger agreement with BitGo.”the company wrote on Twitter.
The suit was filed in Delaware Chancery Court and court papers were expected to be made public on Thursday, September 15. However, at the time of this edition, it was not possible to find them.
“Although BitGo does not believe the complaint contains sensitive information, it was filed in Delaware Chancery Court sealed as a precautionary measure in case Galaxy contends otherwise and wishes to redact some of the allegations before the complaint is made public.”, explained BitGo.
Therefore, before making the complaint public, Galaxy Digital has the possibility to review the documentation to prevent confidential information from being disclosed or even draft some accusations beforehand.
It is necessary to remember that, in the July 2022 release, according to Galaxy Digital, the company would not incur a fee upon withdrawal from the deal due to BitGo’s alleged failure to deliver its financial statements. However, BitGo assures that they did deliver said audited documents and, consequently, the reasons for withdrawing from the agreement were other.
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