BitGo and Galaxy Digital remain locked in a legal dispute over the collapse of a proposed $1.2 billion acquisition that at one point was set to become one of the largest mergers in the cryptocurrency industry.
This week in Delaware Chancery Court, BitGo asserted that Galaxy backed out of the deal in 2022 and is now seeking at least $100 million in damages, according to reporting by Bloomberg.
Bitter Legal Showdown
BitGo alleges Galaxy failed to make reasonable efforts to complete the merger and concealed information about U.S. investigations that could have affected the parties’ ability to secure regulatory approval. Galaxy’s founder and CEO, Michael Novogratz, disputed those claims in court, arguing that the investigations did not involve Galaxy and therefore had no impact on the regulatory review tied to the transaction.
The acquisition was first announced in May 2021. Under the proposed terms, BitGo co-founder and CEO Mike Belshe was expected to join Galaxy as deputy CEO and take a seat on Galaxy’s board. The combined company planned to pursue a Nasdaq listing, a step that required approval from the U.S. Securities and Exchange Commission.
As market conditions deteriorated in 2022 and regulators intensified scrutiny of the industry, the transaction faced increasing obstacles. Testimony in court indicates both companies became worried that the SEC—then led by Chair Gary Gensler—might not approve the deal. To avoid potential SEC hurdles and preserve the transaction, Novogratz said Galaxy considered restructuring the merger through Canada, where Galaxy was already a listed public company.
Missed Audit Deadline
Galaxy terminated the acquisition agreement in August 2022, saying that BitGo failed to provide audited financial statements for 2021 by the July 31 deadline specified in the merger contract. Galaxy maintained that the missed deadline relieved it of any obligation to pay a termination fee.
BitGo has consistently denied those assertions and says it did deliver the required financial documents. During testimony earlier this week, Belshe described Galaxy’s public explanation for ending the deal as “incredibly damaging,” arguing that it wrongly suggested BitGo was unable to complete an audit and harmed the company’s reputation.
The dispute revolves around whether Galaxy’s termination was justified under the merger agreement and whether Galaxy’s public statements and alleged concealment of regulatory investigations caused BitGo measurable harm. Both companies have presented differing accounts of efforts to satisfy closing conditions and to secure regulatory approvals, making the case a complex mix of contract interpretation, regulatory concerns, and reputational damage claims.
In court, each side has sought to frame the timeline and key actions to support its version of events. BitGo emphasizes its continued readiness to close the transaction and points to communications it says demonstrate compliance with the deal’s requirements. Galaxy focuses on market deterioration and regulatory uncertainty, arguing those factors made completion impossible or unreasonably risky.
The litigation will determine whether Galaxy’s termination was lawful and whether BitGo is entitled to damages for what it alleges was an improper repudiation of the merger. The outcome could have broader implications for how acquisition agreements are enforced in the crypto sector, especially when regulatory review and fast-changing market conditions are involved.
As the case proceeds, the court will weigh documentary evidence, testimony from executives, and legal arguments about contract terms, termination rights, and remedies. The final ruling will resolve the parties’ competing claims and potentially clarify obligations for similar transactions in a heavily regulated and volatile industry.