Michael Novogratz, the founder of Galaxy Digital, (NASDAQ: GLXY) have faced off against BitGo Holdings (NYSE: BTGO) CEO Mike Belshe in a Delaware courtroom this week. The dispute centers on a seemingly high-potential but ultimately collapsed acquisition agreement from back in 2021, which had at that time (possibly) represented one of the largest deals in the digital asset sector. The proposed transaction valued BitGo, a prominent provider of digital asset custody and security solutions, at approximately $1.2 billion.
Galaxy Digital, a key player in crypto trading, investment, and asset management, had intended to integrate BitGo’s services to strengthen its position in the growing institutional crypto space.
However, as Bitcoin and other digital assets experienced a sharp decline in value during the “crypto winter,” the economics of the deal shifted dramatically, leading Galaxy to walk away. Notably, BitGo has aggressively pursued compensation, seeking at least $100 million via a reverse termination fee stipulated in the original merger agreement.
The custody firm alleges that Galaxy Digital did not exert reasonable efforts to complete the acquisition and withheld critical information regarding regulatory investigations by US authorities.
These probes, according to BitGo, could have materially affected the transaction’s viability and regulatory approval process.
During testimony in the Delaware Court of Chancery, Novogratz defended his company’s actions emphatically.
He stated that he had consistently advocated for the deal’s completion throughout the challenging period, emphasizing Galaxy Digital’s commitment despite deteriorating market conditions.
The trial, expected to conclude this week with a bench decision from the presiding judge, highlights significant ongoing tensions around contractual obligations in volatile sectors like cryptocurrency.
BitGo’s leadership, represented by CEO Belshe, countered that the firm had fulfilled all required deliverables under the agreement, including the provision of necessary financial documentation.
They argue that Galaxy Digital‘s withdrawal was opportunistic, driven by a desire to avoid an increasingly unfavorable financial commitment rather than legitimate contractual breaches on BitGo’s side.
This legal battle has roots stretching back several years.
The merger agreement was signed in May 2021 amid booming crypto markets. Galaxy terminated the deal in 2022, prompting BitGo to file suit.
Lower court proceedings had initially favored Galaxy Digital, but the Delaware Supreme Court revived the case in 2024, allowing the claims to proceed to trial.
The ongoing proceedings reflect broader challenges in the crypto industry, where market swings, heightened regulatory scrutiny, and complex corporate deals often intersect.
For industry professionals sharply focused on the digital asset space, the case serves as a cautionary tale about the risks inherent in large-scale M&A activity during periods of uncertainty.
Both digital assets focused companies have continued to operate and even collaborate in certain areas, such as staking services, despite the litigation.
BitGo itself went public earlier in 2026, marking a key milestone as one of the first major crypto firms to do so that year. The outcome could have implications not only for the financial standings of both firms but also for how future crypto mergers are structured and properly enforced.