Galaxy and BitGo Face Court Battle Over $100M Merger Dispute

Galaxy Digital and BitGo faced off in court this week as their legal battle over a failed merger continues, according to Bloomberg. The dispute stems from Galaxy Digital's termination of its acquisition of BitGo in August 2022, roughly four years after the companies announced plans to merge in May 2021. BitGo is requesting that Galaxy, led by CEO Michael Novogratz, pay at least $100 million for backing out of a transaction originally valued at $1.2 billion. Galaxy's decision to withdraw from the deal has sparked a legal clash centered on responsibility for the merger's failure and the obligations each party owed to the other.

The Core Dispute

BitGo claims that Galaxy failed to use reasonable efforts to complete the deal and concealed details of probes by U.S. authorities that would have likely impacted their ability to finalize the merger, according to Bloomberg.

Galaxy's position differs significantly. When terminating the acquisition in August 2022, Galaxy stated it did so because of BitGo's "failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement." At that time, Galaxy also asserted that it did not owe a termination fee.

Timeline of Events

Galaxy Digital first announced plans to acquire BitGo in May 2021. Under the proposed arrangement, BitGo co-founder and CEO Mike Belshe was slated to join Galaxy as deputy CEO and become a member of the company's board of directors.

The acquisition was terminated in August 2022 based on Galaxy's stated grounds regarding the missing audited financial statements.

Since 2022, BitGo has maintained that Galaxy owes either the $100 million fee or additional damages exceeding that amount in legal compensation.