Key takeaways:
- The acquisition of BitGo, which Galaxy announced in 2022, has a “clean termination right,” according to the vice chancellor of the Delaware Court of Chancery.
- Galaxy was “pleased” with the court’s decision to dismiss BitGo’s claims.
The United States’ Delaware Court of Chancery has ruled in favor of cryptocurrency investment company Galaxy Digital, effectively dismissing BitGo’s lawsuit against it after the company decided against acquiring it in 2022.
Vice Chancellor, J. Travis Laster, dismissed BitGo’s complaint against Galaxy Digital with prejudice, according to court documents submitted on June 9. Galaxy was “pleased” with the court’s decision to dismiss BitGo’s claims. Galaxy stated in a tweet:
“Now is the time for all of us to work together and focus on the task at hand: Upgrading the global financial system in a manner that promotes innovation and protects investors and consumers alike,”
Based in part on BitGo’s reluctance to submit specific financial statements in its efforts to go public in the United States, Laster determined that Galaxy had a “clean termination right” to the BitGo acquisition. As Laster put it
“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,”
In May 2021, Galaxy first announced that it intended to buy BitGo for $1.2 billion. The merger would have been one of the biggest in the cryptocurrency business had it been successful in closing. By May 2022, Galaxy had stated that it anticipated the transaction to be completed by the end of the year.
After much work, it was announced in August that the deal would not move further. After reporting $554 million in unrealized losses on its crypto holdings for the second quarter of that year, Galaxy made the disclosure just one week later.
Then, in September, BitGo filed a lawsuit in the Delaware Chancery Court, asking for $100 million in damages and asserting that Galaxy’s losses and its ambitions to go public were the true causes of its decision to cancel the agreement.
In March, BitGo announced to sue Fireblocks for making a misleading claim concerning a flaw in the Ethereum wallet signature system. BitGo alleged that Fireblocks’ article breached a mutual disclosure agreement and was just a PR stunt. Only 20 developers had access to the relevant wallet type, according to BitGo, and it was still early access.
