Crypto investment firm Galaxy Digital can finally breathe a sigh of relief as a court dismissed a lawsuit against the company over its failed acquisition of asset custodian BitGo. The investment firm expressed its satisfaction with the outcome, stating that it is time to focus on upgrading the global financial system in a way that promotes innovation while protecting investors and consumers.
The lawsuit stemmed from Galaxy Digital, led by Wall Street veteran Mike Novogratz, calling off its $1.2 billion proposal to acquire BitGo last year. The company cited BitGo’s failure to provide audited financial statements by a specified date as the reason for terminating the deal. However, BitGo argued that the merger agreement was not scheduled to expire until the end of the year and decided to sue Galaxy.
The Delaware Chancery Court vice chancellor sided with Galaxy, stating that the firm had a “valid basis” to terminate the proceedings due to BitGo’s failure to deliver the financial statements. BitGo has not yet commented on the matter.
The Galaxy-BitGo merger, which was first announced in May 2021, would have been one of the most significant deals in the crypto industry if it had been successful. Galaxy initially expected to finalize the acquisition by the end-May 2022. However, tensions began to rise when, in August, Galaxy decided not to proceed with the deal. This announcement came just a week after Galaxy reported $554 million in unrealized losses on its crypto holdings for Q2 of that year.
In September, BitGo filed a complaint with the Delaware Chancery Court, seeking $100 million in damages and claiming that Galaxy’s losses and its efforts to go public were the real reasons for dropping the deal. Despite the setback, both firms continued to pursue other acquisitions independently. Galaxy recently won a bid for another crypto custodian, GK8, auctioned off as part of Celsius’s proceedings. On the other hand, BitGo signed a letter of intent last week to acquire its rival Prime Trust.
While the court’s decision to dismiss the lawsuit allows both companies to move on, the debate over the true reasoning underlying the failed merger remains. Some may argue that the termination is justified due to BitGo’s inability to provide the required financial statements. Others may speculate that Galaxy’s reported losses and ambitions to go public played a more significant role in the canceled acquisition. Nevertheless, the focus now must shift towards fostering innovation, enhancing the global financial system, and ensuring the well-being of investors and consumers in the rapidly-evolving realm of blockchain and cryptocurrency.
Source: Decrypt
