Galaxy Digital Faces Bitgo in Court Over $1.2 Billion Deal Gone Wrong

Galaxy Digital agreed in May 2021 to acquire Bitgo for $1.2 billion, described as the largest crypto deal at the time. Galaxy terminated the agreement in August 2022, citing Bitgo’s failure to deliver audited financial statements for fiscal year 2021 in a contract-compliant form. Galaxy argued it had a clean termination right and owed no fee, pointing to complications from new U.S. SEC staff accounting guidance affecting crypto-related filings. Bitgo disputed that position and claims it provided the required documentation. Bitgo seeks at least the $100 million reverse breakup fee and argues actual damages may be higher. Testimony addressed whether U.S. regulatory inquiries affected approval and whether Galaxy used reasonable efforts to close the deal.

"Bitgo is seeking at least the $100 million reverse breakup fee written into the merger agreement, and argues actual damages may exceed that figure. This was incredibly damaging, Belshe is cited as saying in court, according to Bloomberg's Sabrina Willmer. Bitgo disputed that position. According to Bloomberg, CEO Mike Belshe testified that Bitgo provided the required documentation and that Galaxy's termination claims caused direct harm to the company."

"Galaxy terminated the agreement in August 2022. The company cited Bitgo's failure to deliver audited financial statements for the fiscal year 2021 in a form that met the contractual standard. New U.S. Securities and Exchange Commission (SEC) staff accounting guidance had complicated crypto-related filings, and Galaxy maintained it had a clean termination right with no fee owed. Bitgo disputed that position."

"Mike Novogratz testified this week that U.S. regulatory probes did not affect the merger's approval path. He stated that U.S. regulatory inquiries did not target Galaxy directly and had no bearing on the merger's regulatory approval path. He also discussed Galaxy's Luna trading profits of nearly $400 million, saying those sales were made to reduce risk."

"Bitgo alleges Galaxy failed to use reasonable efforts to close the deal. The company also claims Galaxy withheld details of government inquiries that could have affected regulatory approvals, including potential SEC concerns tied to Galaxy's activities. Bitgo contends Galaxy walked away after the deal became financially unprofitable."

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