BitGo to sue Galaxy Digital for $100M over dropped acquisition

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Dig­i­tal asset cus­to­di­an Bit­Go said it planned to seek more than $100 mil­lion in dam­ages from Galaxy Dig­i­tal, alleg­ing the invest­ment firm owed the funds as part of a “reverse break fee” in its deci­sion to ter­mi­nate an acqui­si­tion agreement.

In a Mon­day blog post, Bit­Go referred to Galaxy’s actions as “improp­er” in claim­ing a breach of con­tract to drop an agree­ment to acquire the dig­i­tal asset cus­to­di­an. Bit­Go has enlist­ed the ser­vices of law firm Quinn Emanuel to pur­sue legal action against Galaxy for not pay­ing a “$100 mil­lion reverse break fee it had promised back in March 2022.”

Accord­ing to Galaxy, Bit­Go failed to pro­vide audit­ed finan­cial state­ments for 2021 by July 31, 2022 as part of the acqui­si­tion agree­ment, a claim Quinn Emanuel part­ner R. Bri­an Tim­mons denied:

“The attempt by Mike Novo­gratz and Galaxy Dig­i­tal to blame the ter­mi­na­tion on Bit­Go is absurd […] Either Galaxy owes Bit­Go a $100 mil­lion ter­mi­na­tion fee as promised or it has been act­ing in bad faith and faces dam­ages of that much 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 at the end of the first quar­ter of 2022 dur­ing which Galaxy CEO Mike Novo­gratz said the firm had “adjust­ed the deal some,” the acqui­si­tion was expect­ed to go through between Q2 and Q4 2022. 

“We believe BitGo’s claims are with­out mer­it and we will defend our­selves vig­or­ous­ly,” a spokesper­son for Galaxy told Coin­tele­graph. “Bit­Go did not pro­vide cer­tain Bit­Go finan­cial state­ments need­ed by Galaxy for its SEC fil­ing. Galaxy’s Board of Direc­tors then made the deci­sion to exer­cise its con­trac­tu­al right to terminate.”

Relat­ed: CoinGecko open to acqui­si­tion but now is ‘too ear­ly,’ co-founder says

It’s unclear if the recent mar­ket down­turn was a fac­tor in the deal poten­tial­ly falling through. Galaxy orig­i­nal­ly said it planned to pay rough­ly $1.2 bil­lion in stock and cash in 2021. Bit­Go said on Mon­day it had more than $64 bil­lion in assets in cus­tody at the end of 2021 and “client growth con­tin­ues into 2022.” 

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