The Delaware Supreme Court recently ruled in favor of BitGo by overturning a lower court’s dismissal of the company’s $100 million lawsuit against Galaxy Digital. The lawsuit originated from a failed acquisition between the two entities. The Supreme Court found that the language in the BitGo-Galaxy Digital $1.2 billion merger agreement was ambiguous, leading to the reversal of the Delaware Chancery Court’s decision. This now allows BitGo to pursue legal action against Galaxy Digital once again.
Initially filed in August 2022, BitGo accused Galaxy Digital of an “intentional breach” of the acquisition agreement after Galaxy terminated the deal, citing BitGo’s failure to provide audited financial statements from 2021. A spokesperson for BitGo’s legal representation expressed satisfaction with the Supreme Court’s decision, emphasizing the importance of moving forward with the case in the Chancery Court. In response, Galaxy Digital stated that they would vigorously defend themselves and expressed confidence in the merits of their case.
Galaxy Digital, led by Mike Novogratz, had announced its intention to acquire BitGo in May 2021 as part of its public offering in the United States. However, issues arose in November 2022 when Galaxy disclosed significant exposure to the cryptocurrency exchange FTX just before it filed for bankruptcy. In 2023, Galaxy Asset Management was appointed by the FTX estate to assist with the selling, staking, and hedging of its crypto holdings, further expanding Galaxy’s reach in the crypto industry.
Despite a slight decline in its stock value, Galaxy Digital has seen overall gains in 2024, particularly following the approval of spot Bitcoin ETFs in mid-January. However, the stock remains significantly lower than its peak in November 2021. Galaxy Asset Management’s global head, Steve Kurz, expects top wirehouses to increase their involvement in spot Bitcoin ETFs within the next year, predicting institutional FOMO as more companies enter the market. The ongoing legal battle between BitGo and Galaxy Digital highlights the complexities and challenges faced by companies in the rapidly evolving cryptocurrency industry.
