BitGo is seeking $100 million in compensation from Galaxy’s improper repudiation and intentional breach of its merger agreement with the crypto custodian.
On Tuesday, September 13, crypto custodian BitGo filed a lawsuit against Mike Novogratz’s crypto investment firm Galaxy Digital Holdings. BitGo is seeking $100 million in damages as Galaxy Digital backed off from its $1.2 billion acquisition of the crypto custodian.
In its tweet on Monday, the crypto custodian noted:
“BitGo filed a lawsuit against Galaxy Digital seeking damages of more than $100 million arising from Galaxy’s improper repudiation and intentional breach of its merger agreement with BitGo”.
BitGo filed the lawsuit on Monday in Delaware Chancery Court. It accused Galaxy Digital of “wrongful repudiation and willful and intentional breach” of the merger agreement. A lawyer at Quinn Emanuel Urquhart & Sullivan, which is representing BitGo also said that the complaint is currently under seal and will open on Thursday, in case Galaxy Digital wants to make any redacts of the allegations.
Earlier in May 2022, Galaxy Digital announced plans to buy BitGo in cash and stock transactions. The goal was to broaden institutional offering and geographic reach by acquiring the crypto custodian. However, Galaxy Digital axed the BitGo deal last month in August citing “BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement”.
BitGo Rejects Galaxy Digilat’s Stand
While Galaxy Digital has accused BitGo of not sourcing audited financial statements, BitGo claims no wrongdoing. The crypto custodian said that it has honored all of its obligations which include the delivery of audited financials.
On Tuesday, a spokesperson for Galaxy digital reiterated that “BitGo’s claims are without merit and we will defend ourselves vigorously.”. Things are likely to get clear as court proceedings move ahead on who owes whom. The two big crypto players have engaged in a legal battle at a time when the crypto market is undergoing a rough period.
Last quarter, Galaxy Digital reported a loss of a staggering $554 million. “The increase in loss was primarily related to unrealized losses on digital assets and on investments in our Trading and Principal Investments businesses, due to decreased digital asset prices, partially offset by profitability in our Mining business,” the company noted.
It will be interesting to see whether BitGo can have a final word in this regard.