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Galaxy Digital founder Michael Novogratz appeared in Delaware court as BitGo pressed its claim that Galaxy owes at least $100 million over the collapse of its proposed $1.2 billion acquisition of the crypto custodian.
Novogratz testified that regulatory and accounting changes, not deal economics, drove Galaxy’s decision to walk away from the transaction.
Galaxy Says SEC Accounting Issues Changed the Deal
Galaxy agreed to buy BitGo in May 2021 in what was one of the crypto industry’s largest announced M&A deals. BitGo sued in September 2022 after Galaxy terminated the transaction, seeking at least $100 million in damages.
BitGo argued that Galaxy intentionally breached the merger agreement after the market downturn made the price less attractive. Galaxy has denied that claim. Galaxy said it had grounds to terminate the deal because BitGo failed to provide audited 2021 financial statements by the July 31 deadline required under the agreement.
Delaware Supreme Court Revived BitGo Case in 2024
Galaxy’s defense initially succeeded in Delaware Chancery Court. But the Delaware Supreme Court revived BitGo’s lawsuit in May 2024. The high court held that the merger agreement’s definition of the required “Company 2021 Audited Financial Statements” was ambiguous.
That meant the dispute could not be dismissed at the pleading stage. The court said a lower court should consider outside evidence before deciding whether Galaxy validly terminated the merger agreement.
Audited 2021 Statements Remain Trial Focus
The case now turns on whether Galaxy made reasonable efforts to close the merger or used the accounting dispute as a way out of a deal struck near the top of the market. Benzinga reported that Novogratz told the court Galaxy pushed to close until SEC-related accounting issues made the transaction impossible.
BitGo CEO Mike Belshe has taken the opposite view, saying BitGo provided everything the contract required. The Delaware court will now have to decide whether Galaxy properly walked away from the deal or still owes BitGo the breakup fee and potentially more.
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Fhumulani Lukoto
Cryptocurrency Journalist
Fhumulani Lukoto holds a Bachelors Degree in Journalism enabling her to become the writer she is today. Her passion for cryptocurrency and bitcoin started in 2021 when she began producing content in the space. A naturally inquisitive person, she dove head first into all things crypto to gain the huge wealth of knowledge she has today. Based out of Gauteng, South Africa, Fhumulani is a core member of the content team at Coin Insider.