Key Takeaways
- The ruling allows BitGo to challenge the termination of a $1.2 billion merger agreement by Galaxy Digital.
- In August 2022, Galaxy terminated the takeover, alleging that BitGo failed to deliver audited 2021 financial statements by a July 31 deadline.
Delaware’s Supreme Court has overturned a lower court’s decision to dismiss a $100 million lawsuit filed by BitGo against Galaxy Digital following a failed acquisition. The court ruling found the language of the merger agreement to be “ambiguous,” siding with BitGo’s argument. The decision grants BitGo the right to challenge Galaxy’s decision to terminate the $1.2 Billion merger agreement.
The Supreme Court’s ruling states, “We reverse the Chancery Court’s decision for the consideration of such extrinsic evidence as may be appropriate to resolve this ambiguity.” This development allows BitGo to pursue its claims in court.
Galaxy Digital announced the $1.2 billion acquisition deal in May 2021, during a period of high demand for digital assets when Bitcoin exceeded $55,000. However, by August 2022, Galaxy terminated the takeover, alleging that BitGo failed to deliver audited 2021 financial statements by a July 31 deadline.
BitGo responded by suing Galaxy, seeking $100 million in damages and alleging that Galaxy “willfully” breached the merger agreement because it could not afford the $1.2 billion price tag after suffering significant financial losses during the crypto bear market.
In November 2022, amid the collapse of crypto exchange FTX, Galaxy disclosed $77 million in exposure to the firm before FTX filed for bankruptcy.
BitGo alleges that Galaxy Digital intentionally breached the acquisition agreement by terminating it in August 2022, citing BitGo’s failure to provide audited 2021 financials. The Delaware Court of Chancery had dismissed the case in June 2023. At the time, Vice Chancellor J. Travis Laster stated that Galaxy had a “clean termination right” to the acquisition.
