Quick Takeaways
- Galaxy considered restructuring the merger through Canada to avoid SEC hurdles amid regulatory concerns.
- The $1.2 billion deal between BitGo and Galaxy is now a legal battle over alleged breach and damages of at least $100M.
- Galaxy terminated the merger in 2022, citing missed audited financials from BitGo, but both sides dispute the reasons.
- Lawsuit highlights tensions over regulatory approval, disclosures, and the impact of SEC scrutiny on crypto mergers.
Galaxy Digital and BitGo Clash in Court Over Failed $1.2 Billion Crypto Merger
Legal Battle Begins in Delaware
Galaxy Digital and BitGo are fighting in court over a failed merger worth $1.2 billion. The deal was once thought to be one of the largest in the cryptocurrency industry. In court, BitGo said Galaxy backed out of the agreement in 2022. BitGo is asking for at least $100 million in damages. The company’s lawyer argued that Galaxy did not make enough effort to finish the deal. They also accused Galaxy of hiding information about investigations by U.S. authorities. Galaxy’s CEO, Michael Novogratz, said those investigations did not affect the approval process or the merger. The original agreement was announced in May 2021, with plans for BitGo’s CEO to join Galaxy as deputy CEO. The merged company aimed to list shares on Nasdaq, which needed approval from the U.S. Securities and Exchange Commission (SEC). However, concerns about regulatory approval grew when crypto markets declined in 2022. To avoid SEC hurdles, Galaxy even looked into restructuring the deal through Canada, where it was already listed.
Disagreements Over Deadlines and Regulatory Concerns
Galaxy ended the deal in August 2022, citing missed deadlines. The company said BitGo failed to provide audited financial statements for 2021 by July 31. Galaxy claimed this meant it did not have to pay a termination fee. BitGo denied the claims and said it had sent the necessary documents. During the court hearing, BitGo’s CEO, Mike Belshe, said Galaxy’s explanation was damaging. He argued that the reason given made it seem like BitGo could not complete an audit. Overall, the case shows how regulatory issues and missed deadlines can end major deals in the crypto industry. Neither company has shared a clear resolution yet, but the courtroom battle continues.
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