BitGo has sued Galaxy Digital over the collapse of their planned $1.2 billion merger, a case that returned to a Delaware courtroom this week as Galaxy CEO Mike Novogratz took the stand to defend the company’s decision to walk away from the deal.
Why BitGo Is Suing Galaxy Digital
The dispute traces back to May 2021, when Galaxy Digital announced it would acquire BitGo for approximately $1.2 billion, consisting of 33.8 million newly issued Galaxy shares and $265 million in cash. The deal was meant to create what Galaxy called a “pre-eminent global provider” of digital asset financial services.
On August 15, 2022, Galaxy announced it was terminating the acquisition, claiming BitGo failed to deliver compliant 2021 audited financial statements by July 31, 2022. Galaxy said no termination fee was payable.
BitGo rejected that rationale the same day. R. Brian Timmons, BitGo’s general counsel, stated:
“BitGo has honored its obligations thus far, including the delivery of its audited financials.”
— R. Brian Timmons, BitGo General Counsel, via Business Wire
BitGo pointed out that the merger agreement had been amended on March 30, 2022, pushing the end date to December 31, 2022 and adding a $100 million reverse termination fee. By September 2022, BitGo had filed suit in Delaware seeking at least $100 million in damages.
What Happened to the $1.2 Billion Crypto Merger
Galaxy’s initial defense succeeded at the trial court level, where the case was dismissed. But on May 22, 2024, the Delaware Supreme Court reversed the dismissal, finding that the merger agreement’s definition of the required 2021 audited financial statements was ambiguous. The court remanded the case for further proceedings.
The dispute centers on whether BitGo’s financial statements needed to comply with SEC Staff Accounting Bulletin 121, which took effect on April 11, 2022, after the original agreement was signed. Galaxy’s position was that the statements were non-compliant; BitGo argued the requirement was never part of the deal.
According to crypto.news summarizing Bloomberg’s reporting, Novogratz testified this week that the SEC under Gary Gensler made approval of the deal difficult. Galaxy had tied the acquisition to its planned U.S. domestication and Nasdaq listing, which required an SEC-reviewed registration statement.
At the time of termination, BitGo held over $64 billion in assets under custody, making it one of the largest institutional crypto custodians. Mike Novogratz stated at the time that Galaxy remained “committed to continuing our process to list in the U.S.” despite abandoning the merger.
Why the Dispute Matters for Crypto M&A
The BitGo-Galaxy case has become one of the longest-running and highest-profile merger disputes in the digital asset industry. Its outcome could set precedent for how courts interpret financial statement compliance obligations in crypto acquisitions, particularly when regulatory leadership changes shift enforcement expectations mid-deal.
The litigation also highlights the risks of reverse termination fee structures in crypto M&A. The March 2022 amendment that added the $100 million break fee was meant to protect BitGo if Galaxy walked away, and whether that fee is enforceable is now at the center of the trial.
The case proceeds in Delaware at a time when the broader crypto market remains cautious, with the Fear & Greed Index reading 28, firmly in “Fear” territory. Bitcoin traded near $75,674, down 2.44% over the prior 24 hours.
For companies considering large-scale crypto mergers, the trial’s resolution will signal how much weight Delaware courts give to mid-deal regulatory changes, and whether parties in the digital asset space can rely on ambiguous compliance terms to exit agreements without penalty.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
