Galaxy Digital said it would no longer acquire BitGo in what would have been a massive deal in the crypto world. This led to BitGo’s deprecation, and the digital asset custodian is now suing.
BitGo, a digital asset custodian, announced plans to sue Galaxy Digital for more than $100 million in damages, claiming the investment firm owed the cash as part of a “reverse break fee” in its decision to cancel an acquisition agreement.
Galaxy Digital said it would terminate its proposed deal to acquire BitGo for $1.2 billion earlier today. The firm, run by billionaire Mike Novogratz, said the deal’s termination would not result in any fee.
As part of the acquisition deal, BitGo was required to deliver audited financial statements for 2021 by July 31, 2022, according to Galaxy, a claim Quinn Emanuel partner R. Brian Timmons denied:
“The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd… 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.”
The digital asset custodian is now suing for monetary damages because the merger agreement was not set to expire until the end of the year. Quinn Emanuel, a law firm, has been engaged to sue Galaxy Digital.
Galaxy Digital posted a Q2 loss of more than $500 million last week. According to the New York-based corporation, the figures were attributed to “unrealized losses” on digital assets.
In May of last year, Galaxy announced its intention to acquire BitGo. The massive transaction would have been one of the largest in the cryptocurrency sector, bringing Galaxy around 400 additional global clients.
But the deal never materialized, and today Galaxy said it was pulling the plug “following BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement.”
It’s unclear whether the recent market collapse played a role in the agreement potentially failing. Galaxy initially intended to pay approximately $1.2 billion shares and cash in 2021. BitGo announced on Monday that it has more than $64 billion in assets under custody at the end of 2021, with “client growth continuing into 2022.”
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