BitGo Wins Appeal in $100 Million Lawsuit Against Galaxy Digital
The Delaware Supreme Court has overturned a lower court’s dismissal of BitGo’s $100 million lawsuit against Galaxy Digital, ruling in favor of BitGo.
This lawsuit stems from a failed acquisition between the two companies.
In a May 22 filing, the Delaware Supreme Court noted that the language used in the $1.2 billion merger agreement between BitGo and Galaxy Digital was “ambiguous.”
Due to this ambiguity, the court overturned the Delaware Court of Chancery’s decision and opened the opportunity for additional evidence to be considered to resolve this ambiguity.
BitGo Granted Legal Action Against Galaxy
The successful appeal, initially filed on February 7, now provides BitGo with another chance to take legal action against Galaxy Digital.
In the initial lawsuit filed in August 2022, BitGo accused Galaxy of “willful breach” of the acquisition agreement.
Galaxy terminated the deal, claiming it had the right to do so after BitGo failed to deliver audited financial statements for 2021.
“We believe justice was served in the appeal and are pleased to proceed with this case in the Court of Chancery,” said R. Brian Timmons, a partner at Quinn Emanuel representing BitGo.
Previously, in June 2023, the Delaware Court of Chancery dismissed BitGo’s case with prejudice. Vice Chancellor J. Travis Laster had then ruled that Galaxy had a “clean termination right” in the BitGo acquisition.
Responding to the latest decision by the Delaware Supreme Court, a Galaxy spokesperson said the company would “continue to vigorously defend itself” and remains confident in the merits of its case.
Background and Broader Implications
Led by Mike Novogratz, Galaxy announced its intention to acquire BitGo in May 2021 as part of its U.S. public offering plan.
However, in November 2022, amid the collapse of cryptocurrency exchange FTX, Galaxy revealed approximately $77 million in exposure to FTX, shortly before FTX filed for bankruptcy.
Galaxy’s Continued Expansion
In 2023, Galaxy Asset Management was appointed by the FTX estate to assist in the sale, staking, and hedging of its cryptocurrency assets.
Galaxy Asset Management is the institutional investment arm of Galaxy Digital Holdings, providing global market and digital infrastructure solutions. The division, led by Steve Kurz, was established in 2018.
Despite a 4% drop in Galaxy Digital stock (GLXY) to $12.80 in after-hours trading, the stock has risen 23.5% year-to-date. Most of these gains followed the mid-January approval of a spot Bitcoin ETF.
However, the stock remains nearly 70% below its all-time high of $40, last seen in November 2021 during the previous crypto market peak.
Recently, Steve Kurz, Galaxy Asset Management’s global head, expressed his expectations for increased participation in spot Bitcoin ETFs by top securities firms within the next year.
“I would be surprised if the top 10 securities firms are not involved in this business within the next year… We might see institutional FOMO,” he stated during the Exchange ETF conference in Miami Beach, Florida, on February 19, speaking to Fox Business News.
His comments came as firms offering spot Bitcoin ETFs were inundated with inquiries from financial advisors during the event.
