A United States court in Delaware just dismissed a year-long case between Galaxy Digital, a crypto investment company, and BitGo, a digital asset custody and security company. BitGo filed claims against the crypto investment firm last year over a supposedly botched acquisition deal. However, Vice Chancellor J. Travis Laster has dismissed the lawsuit in its entirety, clearing Galaxy Digital of any wrongdoing.
“There are no facts alleged that could make it reasonably conceivable that the exercise of the termination right was inconsistent with the implied covenant of good faith and fair dealing,” said the federal judge. Court documents also claimed a restriction that would hinder their inclusion in a Form S-1 prepared in compliance with Regulation S-X
How The Legal Dispute Arose Between Galaxy Digital And BitGo
News broke out in mid-2021 that Galaxy Digital and BitGo were in talks for Galaxy to acquire BitGo, a digital asset custody provider, for $1.2 billion in a cash and stock deal.
If the deal had gone through, this would’ve been the biggest and the first $1 billion deal in the cryptocurrency industry. However, Galaxy called off the deal in August 2022, claiming BitGo had breached clauses in the acquisition agreement.
The legal dispute arose from Galaxy’s claim that BitGo failed to disclose audited financial statements for 2021 before a deadline of July 2021. In response, BitGo filed a lawsuit in September for $100 million in damages from Galaxy Digital, claiming a failure to pay the reverse termination fee outlined in the acquisition agreement.
Total market cap sitting at $1.03 trillion | Source: Crypto Total Market Cap on TradingView.com
What’s Next For Both Companies?
The dismissal of BitGo’s lawsuit is a big victory for Galaxy Digital. Not only does it remove the threat of a hefty $100 million payout, but it also validates Galaxy’s decision to terminate the acquisition deal.
The company, led by Michael Novogratz, said in a Twitter post, that the company is now looking to focus on its mission of “upgrading the global financial system in a manner that promotes innovation and protects investors and consumers alike.”
Galaxy Digital has been subject to a few hits in the crypto industry. The company had a $77M exposure to failed cryptocurrency exchange FTX, while also suffering a net loss of $288 million for the fourth quarter of 2022. In the first quarter of 2023, however, it boasted a net income of $134 million and now looks forward to the acquisition of other companies in the crypto industry.
BitGo on the other hand, has promised to appeal the decision. Represented by law firm Quinn Emanuel, the company maintains that Galaxy Digital unlawfully terminated the agreement. But they’ll have to go back to the drawing board in their quest for payment for damages.