In a significant legal victory, Galaxy Digital, a prominent American cryptocurrency investment and asset management company, has emerged unblemished from its lawsuit with BitGo, a provider of digital asset custody services. Reports indicate that the case has been dismissed, providing Galaxy Digital with a crucial reprieve in this legal dispute.
Court Validates Galaxy’s ‘Clean Termination’ of BitGo Deal
The US-based Delaware Court of Chancery has largely dismissed the case brought forward by digital asset custodian BitGo against crypto investment firm Galaxy Digital, following Galaxy’s decision to abandon its planned acquisition of BitGo in 2022.
Court records dated June 9 reveal that Vice Chancellor J. Travis Laster has dismissed BitGo’s lawsuit against Galaxy Digital with prejudice. This ruling comes in the wake of Galaxy’s decision to abandon its proposed $1.2 billion acquisition of BitGo in August 2022, despite considerable efforts, due to a contract violation. In response, BitGo initiated a lawsuit against Galaxy, demanding $100 million in compensation.
This ruling arrives two years subsequent to Galaxy’s initial announcement in May 2021 of its plans to purchase BitGo in a deal comprising of cash and stock, estimated to be worth around $1.2 billion.
Galaxy disclosed last August that it was terminating its agreement to acquire BitGo, citing that the latter had failed to provide audited financial statements for 2021 by the stipulated deadline of July 31.
In response, BitGo engaged the services of the law firm Quinn Emanuel. The firm asserted that BitGo had indeed submitted the required documents. R. Brian Timmons, a partner at Quinn Emanuel, previously stated that BitGo was entitled to a termination fee of $100 million or damages exceeding that amount.
BitGo To Challenge Court’s Decision
Judge J. Travis Laster approved Galaxy Digital’s request for dismissal, as legal documents indicate that BitGo did not provide “contractually compliant 2021 Company Audited Financial Statements” by the agreed deadline.
The documents were deemed non-compliant due to a use restriction that would hinder their inclusion in a Form S-1 prepared in accordance with Regulation S-X, as per the court document.
A BitGo spokesperson stated that the company intends to appeal the court’s decision, maintaining that Galaxy unjustly terminated the agreement.
According to the filing on June 9, Laster further stated that Galaxy “did not renounce the transaction agreement,” and “the purported breaches of the agreement could not result in causally related damages.” He said:
“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.”
BitGo company revealed a $77 million exposure to the unsuccessful cryptocurrency exchange FTX, which filed for bankruptcy in November.
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