In a recent development stemming from last year’s planned acquisition of BitGo by Galaxy Digital, a Delaware Chancery Court has found that Galaxy’s backing out of the deal was a “clean termination.” The initial acquisition plan, announced in May 2021, was estimated to be worth around $1.2 billion in cash and stock transactions. However, Galaxy ended its agreement to purchase BitGo in August, alleging that BitGo had not provided audited 2021 financial statements by the agreed deadline of July 31.
BitGo hired the law firm Quinn Emanuel, which claimed that the company had submitted the necessary documents. A partner at the firm, R. Brian Timmons, previously stated that BitGo was owed a $100 million termination fee or damages exceeding that amount. Nevertheless, Judge J. Travis Laster granted Galaxy Digital‘s motion to dismiss on June 9. The judge stated that BitGo “failed to deliver contractually compliant 2021 Company Audited Financial Statements” within the stipulated timeframe.
The financial statements were deemed non-compliant because they contained a use restriction preventing their inclusion in a Form S-1 prepared according to Regulation S-X. BitGo intends to appeal the court’s decision, asserting that Galaxy wrongfully terminated the agreement. However, Judge Laster added that Galaxy did not repudiate the transaction agreement and that the alleged breaches could not lead to causally related damages.
A Galaxy spokesperson expressed satisfaction with the court’s decision to dismiss BitGo’s claims, emphasizing the need to work together and focus on upgrading the global financial system in a way that fosters innovation and safeguards investors and consumers. The court’s ruling came just one day after BitGo announced its intention to acquire 100% of Prime Trust’s parent company, Prime Core Technologies.
Although the disagreement between the two companies creates a conflicting landscape, the primary focus should be on fostering a global financial ecosystem that benefits all stakeholders. Understanding the different perspectives in this scenario can help shed light on the challenges and opportunities surrounding such business deals.
Despite this setback, both companies continue to actively participate in the crypto markets. For instance, BitGo’s planned acquisition of Prime Core Technologies demonstrates its commitment to expanding its footprint in the digital asset industry. On the other hand, Galaxy Digital remains a prominent player in the crypto investment space.
While it is crucial to acknowledge the court’s decision and the implications it has for both parties, it is equally important to recognize the potential for collaboration and growth in the broader crypto market. By prioritizing the development and adoption of innovative financial technologies and adhering to regulatory frameworks, businesses like Galaxy and BitGo can continue to contribute meaningfully to the fast-paced world of cryptocurrency and blockchain technology.
Source: Blockworks
