Galaxy Digital (TSX: GLXY) has terminated its acquisition of Bitgo, an institutional digital asset trading and custody provider.
Galaxy currently has a market cap of around CDN $2.9 billion. The proposed merger, put in place in 2021, valued Bitgo at around $1.2 billion.
In a public statement released today, Galaxy Digital said it had: “exercised its right to terminate its previously announced acquisition agreement with BitGo following BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement.”
Galaxy Digital claims that “no termination fee is payable in connection with the termination.”
Mike Novogratz, CEO and founder of Galaxy and a staunch crypto advocate who is regularly seen on CNBC pumping digital assets, issued the following statement:
“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”
Galaxy added that it intends to complete its proposed reorganization and domestication to become a Delaware-based company, while pursuing a listing on Nasdaq following the SEC’s review and approval by the exchange.
Bitgo is singing a different tune, though, claiming Galaxy needs to pay a $100 million separation fee.
In a separate blog post, Bitgo said:
“it intends to hold Galaxy Digital legally responsible for its improper decision to terminate the merger agreement with BitGo, which was not scheduled to expire until December 31, 2022, at the earliest, and to not pay the $100 million reverse break fee it had promised back in March 2022 in order to induce BitGo to extend the merger agreement. Galaxy informed BitGo of both decisions this past Friday. BitGo said it has hired litigation powerhouse Quinn Emanuel to take appropriate legal action.”
R. Brian Timmons, a partner with Quinn Emanuel, slammed Novogratz’s assertion that BitGo was to blame for the break up – calling it “absurd.”
“BitGo has honored its obligations thus far, including the delivery of its audited financials. It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco. Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more.”
Mike Belshe, BitGo’s founder and CEO, shared that his company’s outlook remains strong, ending 2021 with more than $64 billion in assets under custody. Steering clear of commenting on Novogratz’s claims, Belshe said they are focused on their mission:
“We have an expanding pipeline of product launches and we are dedicating even more resources to building institutional-grade products and services for our clients and the industry. We are now turning 100% of our focus to these exciting initiatives for the benefit of our clients, shareholders and employees. I have never been more bullish about our future.”