Galaxy Digital has announced that it is going to terminate its previously announced acquisition agreement with BitGo, a U.S.-based digital asset trust and security company. Last year, Galaxy had announced its decision to buy BitGo for $1.2bn in cash and stock, making it the first $1bn deal in the cryptocurrency industry.
Galaxy said that it pulled the plug on BitGo’s acquisition “following BitGo’s failure to deliver audited financial statements for 2021 that comply with the requirements of our agreement by 31st July 2022.”
Galaxy, the technology-driven financial services and investment firm that is focused on cryptocurrency and digital assets, added that, “No termination fee is payable in connection with the termination.”
BitGo Will Hold Galaxy Digital “Legally Responsible”
After Galaxy’s decision to end the deal, BitGo released a statement saying it “intends to hold Galaxy legally responsible for its improper decision to terminate the merger agreement with BitGo, which was not scheduled to expire until 31st December 2022, at the earliest and to not pay the $100 million reverse break fee it had promised back in March 2022 in order to induce BitGo to extend the merger agreement.”
Galaxy has already hired Quinn Emanuel as its attorney to take appropriate legal action.
R. Brian Timmons, a partner with Quinn Emanuel said, “The attempt by Mike Novogratz, CEO and founder of Galaxy, and Galaxy Digital to blame the termination on BitGo is absurd. BitGo has honored its obligations thus far, including the delivery of its audited financials.”
Talking about Galaxy’s Q2 losses in 2022, Timmons said, “It is public knowledge that Galaxy reported a $550m loss this past quarter, that its stock is performing poorly, and that both Galaxy and 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 much or more,” stated Timmons.
Galaxy Focused on Listing in the U.S.
Talking about the company’s direction going ahead, Novogratz said, “Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”
According to the company leadership, Galaxy intends to complete the proposed reorganization and domestication to become a Delaware-based company and subsequently list on the Nasdaq upon completion of the SEC’s review, subject to stock exchange approval of the listing.
Galaxy also announced the rollout of Galaxy One Prime, “a new product offering for institutional investors that will integrate trading, lending, and derivatives alongside access to qualified custody, all through a unified tech platform.”
“Galaxy One Prime will leverage proprietary in-house technology, as well as a multi-faceted custodial architecture that integrates qualified blue-chip custodians for broad asset support and tailored account types,” the company said.
BitGo Remains Bullish About Its Future
Meanwhile, BitGo’s founder and CEO Mike Belshe said, “BitGo’s business has continued to grow and its operational and strategic outlook remain strong.” He continued, “BitGo ended 2021 with over $64bn in assets in custody. Client growth was strong and BitGo grew by over three times year over year and client growth continues into 2022, which underscores the need for BitGo to remain focused on our mission.”
“We have an expanding pipeline of product launches and we are dedicating even more resources to building institutional-grade products and services for our clients and the industry,” revealed Belshe. “We are now turning 100% of our focus to these exciting initiatives for the benefit of our clients, shareholders and employees. I have never been more bullish about our future.”
On the Flipside
- The fallout of the deal between Galaxy and BitGo has shocked Twitter. Users think it would have been a good marriage.
Why You Should Care
Both the companies remain at loggerheads about when BitGo was supposed to deliver audited financial statements.