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- Galaxy Digital is facing a lawsuit from Bitgo after it regened on a $100 million takeover deal
- Bitgo plans to take legal action after Galaxy Digital backed out, citing a lack of financial disclosure
- Bitgo says Galaxy Digital never paid it the $100 million it was owed to extend merger talks
In a move that is straight from the Twitter playbook, institutional digital asset custody service Bitgo has said it may take legal action against Mike Novogratz’s Galaxy Digital after the latter pulled out of a $100 million deal. In a press release yesterday, BitGo revealed that it has hired legal firm Quinn Emanuel to take “appropriate legal action” against Galaxy, which reneged on the deal after Bitgo allegedly failed to follow through on disclosing requested financial documents.
Galaxy Digital Says Bitgo Failed to Disclose Financial Data
Galaxy Digital agreed to buy BitGo all the way back in May 2021, with Bitgo stating that the deal would allow it to offer its digital asset infrastructure capabilities to “significantly more corporate, institutional, and high net worth investor clients.”
However, things seem to have gone downhill from these happy tidings, with Galaxy Digital publishing a press release yesterday in which the company said it had “exercised its right to terminate its previously announced acquisition agreement with BitGo following BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement.”
Galaxy Digital added that “No termination fee is payable in connection with the termination”, although it seems that BitGo might have something to say about that.
Bitgo Calls Claims “Absurd”
In its own press release, filed just seven hours later, Bitgo said that it “intends to hold Galaxy Digital legally responsible for its improper decision to terminate the merger agreement”, with R. Brian Timmons of Bitgo’s counsel Quinn Emanuel saying that, “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.”
This refers to a $100 million reverse break fee that Galaxy Digital had promised to Bitgo back in March 2022 as an inducement to extend the merger agreement.
Thomas said that the attempt by Novogratz and Galaxy Digital to blame the termination on Bitgo was “absurd”, and said that the deal being pulled was down to Galaxy Digital’s wanting to save money after being hit by the market downturn, the Luna debacle, and poorly performing stock.
This is a very similar argument to the one made by Twitter against Elon Musk, who they say wants to pull out of the $44 billion deal in the wake of Tesla’s share price taking a hit since the deal was agreed.