itGo, a digital asset custody firm, has announced it will be suing Galaxy Digital. BitGo says that it will require over $100 million in damages from Galaxy Digital over claims that the Michael Novogratz-owned company owed funds to BitGo for reversing its decision to acquire the company.
BitGo set to sue Galaxy Digital
Galaxy Digital said the investment company owed the alleged funds as part of a “reverse break fee” after terminating the acquisition deal. The blog post shared on Monday referred to the actions taken by Galaxy Digital as “improper.”
BitGo further said there was a contract breach in the agreement to acquire BitGo. The digital asset custodian has already supported the services of the Quinn Emanuel law firm to pursue any legal action against Galaxy Digital. BitGo claims that Galaxy failed to pay the $100 million reverse break fee promised in March 2022.
Galaxy said that BitGo failed to offer audited financial reports for 2021 by the end of July as required in the acquisition deal, which was why it terminated the deal. However, this claim has been denied by the law firm representing BitGo, saying that Galaxy was acting in bad faith, and if it fails to pay the $100M termination fee, it could face more damages.
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Galaxy Digital’s deal to acquire BitGo
Galaxy Digital announced its plan to acquire BitGo in May last year as part of the company’s plans to undergo a public listing in the US. However, the deal was delayed until the end of Q1 2022, after which the company’s CEO, Michael Novogratz, sad that the firm had adjusted the deal slightly. The acquisition was expected to be complete between Q2 and Q4 2022.
Galaxy has said that the allegations made by BitGo lack merit, and the company would defend itself. Galaxy has stressed that BitGo failed to submit the financial statements needed for a filing with the US Securities and Exchange Commission (SEC).
The Board of Directors at Galaxy Digital has also decided to exercise its contractual obligation to terminate the deal. It remains unclear whether the recent bear market contributed to the failure of this acquisition.
Galaxy Digital also plans to pay around $1.2 billion in stock and cash in 2021. BitGo has said it has over $64 billion in assets under management by the end of 2021. The levels of client growth have also continued to increase in 2022.