- Galaxy Digital was sued for $100M for discarding the BitGo takeover deal.
- BitGo holds Galaxy accountable for the bad faith the merger agreement brought.
- Damages to BitGo claimed to be not less than $100 million.
Last Tuesday, BitGo Inc. filed a lawsuit on seal against Galaxy Digital Holdings Ltd. for walking away from its $1.2 billion takeaway deal. BitGo, a digital asset custodian, seeks at least $100 million in damages, as per the civil complaint in Delaware chancery court.
According to the court filing made public last Thursday, Galaxy “deliberately and illegitimately caused the failure of the Merger,” because “acquiring BitGo or paying the Termination Fee” would be “financially unpalatable.” The suit claimed that Galaxy was desperate to pull out of the deal, but doing so would be subject to a $100 million reverse termination fee. In addition, the suit stated that Galaxy used last-minute criticisms of BitGo’s accounting methods to delay and deflect the acquisition.
On the contrary, Galaxy’s spokesperson said:
We completely disagree with the allegations in the complaint. We are confident in our position and have filed a motion to dismiss the complaint.
Galaxy handed out a copy of the motion pointing out BitGo’s “failure to state a claim upon which relief can be granted.” Adding that the company will be filing numerous reasons for the dismissal of the briefing.
Earlier this year, the crypto-centered investment firm Galaxy hesitated to wrap up the end deal payment in 2021 due to the plummeting prices of cryptocurrencies amid the crypto meltdown. Most crypto firms suffered great losses in their portfolio and businesses, this includes Galaxy.
By February, Galaxy said they were unable to get the paperwork in time to close the deal before the initial agreement on March 31. Both parties settled to extend the closing date up to the end of 2022, but Galaxy will pay a $100 million termination fee if the deadline was missed.
As per the documents filed, Galaxy’s outlook “had darkened significantly,” by May. In August, Galaxy announced that they are withdrawing from the deal due to BitGo’s failure to provide “audited financial statements for 2021 that comply with the requirements of our agreement,” which BitGo said they had “absolutely” handed out that document.
Galaxy, an advocate of Terra’s Luna, revealed net losses of $665.9 million in the first two quarters of this year, as per TMX Group. Its company US shares that are traded at around $35 in November last year dived up to $5.62 last week.
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