Galaxy backing out of BitGo deal a ‘clean termination’, court finds

BitGo failed to deliver the required audited financial statements in time, Delaware Chancery Court judge decides

June 12, 2023 11:13 am

Galaxy CEO Mike Novogratz | Source: Seb Daly/ RISE via Sportsfile "Mike Novogratz" (CC license)

Galaxy cutting its planned massive deal to acquire BitGo last year was a “clean termination,” a Delaware Chancery Court found.

The decision comes two years after Galaxy first revealed its intent to acquire BitGo in May 2021 as part of a cash and stock transaction valued at roughly $1.2 billion.

The crypto investment firm revealed last August it was ending its agreement to buy BitGo — alleging at the time that the firm failed to deliver audited 2021 financial statements by July 31.

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BitGo hired law firm Quinn Emanuel, which said the company had submitted the necessary documents. R. Brian Timmons, a partner at the firm, previously said BitGo was owed a $100 million termination fee, or damages that exceed that.

But Judge J. Travis Laster granted Galaxy Digital’s motion to dismiss on June 9, noting that BitGo “failed to deliver contractually compliant 2021 Company Audited Financial Statements” by the agreed upon date, legal documents show.

“The financial statements were non-compliant because they contained a use restriction that would prevent them from being included as part of a Form S-1 prepared in compliance with Regulation S-X,” the document states.

“BitGo plans to appeal the court’s decision, and continues to believe that Galaxy wrongfully terminated the agreement,” a BitGo spokesperson told Blockworks.

Laster added that Galaxy “did not repudiate the transaction agreement” and “the alleged breaches of the agreement could not lead to causally related damages,” according to the June 9 filing.

“We’re pleased with the court’s decision to dismiss BitGo’s claims,” a Galaxy spokesperson told Blockworks in an email. “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 judge’s decision came a day after BitGo said it signed a letter of intent to buy 100% of the equity of Prime Trust parent company Prime Core Technologies.

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