On Monday, Galaxy Digital Holdings, a financial services company, announced that it has withdrawn its bid to acquire BitGo, a cryptocurrency custody provider, from the market. It was stated in the statement that Galaxy exercised its right to terminate the deal in accordance with the acquisition agreement because BitGo had failed to submit audited financial statements for 2021 by July 31, 2022 as per the acquisition agreement. During the termination process, Galaxy stated that no termination fee will be paid as a result of the termination.
Galaxy initially announced plans to acquire BitGo in May 2021 as part of its plans to go public in the United States. Despite multiple delays in the acquisition, Galaxy was expected to complete the transaction by 2022. Galaxy said in April that it would pay $100 million if it failed to acquire BitGo by Dec. 31, 2022.
Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the US and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.
Mike Novogratz, CEO and Founder of Galaxy
The claim made by Galaxy Digital was denied by BitGo. Brian Timmons, Global Head of Complex Litigation for Quinn Emanuel, representing BitGo, said the company has honored its obligations thus far, including the delivery of its audited financials.
Timmons said in a statement that [Galaxy Digital CEO] Mike Novogratz’s attempts to blame the termination on BitGo are absurd. As part of its damages claim, BitGo said it would seek damages in excess of $100 million. According to BitGo, Galaxy Digital had promised to pay a $100 million reverse break fee when Galaxy Digital tried to induce BitGo into extending the merger agreement in March.
There has also been a decline in the share price of Galaxy Digital , which is traded on the Toronto stock exchange as well as over-the-counter markets, where the shares have fallen by 73% from $34 to $9 per share over the same timeframe.
Due to the decline in the share price of BitGo, Galaxy announced at the end of its first quarter that it would have to restructure the terms of its acquisition of the company. A major backer of Terra, Galaxy Digital’s CEO Mike Novogratz inked a LUNA tattoo on his arm months before Terra’s LUNA and algorithmic stablecoin UST collapsed in May, resulting in a $45 billion loss.
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.
Brian Timmons, Global Head of Complex Litigation for Quinn Emanuel
In its most recent quarterly earnings results, Galaxy Digital reported a loss of $554 million, citing declines in crypto asset prices as well as an unrealized loss charge on its crypto holdings, which it attributed to the decline in crypto asset prices. A total of approximately $1 billion in cash was also held by the company.
According to Mark Palmer, head of digital asset research for BTIG, Galaxy’s long-awaited acquisition of BitGo was part of a broader plan, which included becoming a Delaware company and listing its stock on a U.S. exchange. The company said on Monday that it remains committed to becoming a Delaware corporation with the aim of eventually listing on Nasdaq.
