BitGo is planning to take legal action against Galaxy Digital’s decision to terminate the acquisition of the crypto platform.
BitGo is pursuing legal actions against Galaxy Digital and is seeking $100 million in damages after the financial services and investment management firm announced it ended the acquisition deal, according to the official statement.
The company believes the digital bank’s actions are “improper” and plans to hold it accountable.
Digital Galaxy claims BitGo failed to provide financial statements for 2021 – the accusations BitGo denies, calling it “absurd.” “BitGo has honored its obligations thus far, including the delivery of its audited financials,” the company said in a statement.
R. Brian Timmons, a partner at Quinn Emanuel, a legal company representing BitGo in the matter, claims that Galaxy Digital’s decision to bail out from the deal is the result of their own actions.
“It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco. Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more.”
The $1 billion acquisition deal was announced last year at the peak of the crypto market, with the Bitcoin price reaching $60,000 for the first time in history. At the time, Michael Novogratz’s company said it wanted to expand Galaxy’s reach as a crypto-focused financial services platform.
The original terms of the deal included $265 million in cash and issuing 33.8 million shares as a part of the acquisition, while BitGo shareholders would own 10% of the company. But in March, the deal was delayed due to negotiations regarding the shareholders’ ownership amount.
As the crypto market suffered a “crypto winter” for the last six months, Galaxy Digital did not have a profitable quarter, with the latest earnings showing a loss of $554.7 million.
Novogratz himself experienced tremendous losses following the UST stablecoin and its sister token Luna crash in May. The former Goldman Sachs trader was a firm believer in the cryptocurrency, investing himself and through his investment firm in the fourth quarter of 2020. He even made a Luna tattoo that he says he is not planning to remove even after the $55 billion market dip caused by Luna.
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