BitGo calls Galaxy Digital’s hasty exit from merger deal

The decision by the crypto bank Galaxy Digital to exit the merger with BitGo was driven by its enormous losses and unforeseen difficulties with the SEC. This is stated in the lawsuit filed by the custodian against the failed partner.

BitGo lawyers refused to link the exit from the deal to delays in publishing financial statements, which Galaxy Digital cited as the justification. That was merely a ‘pretext’, they added.

“This false assertion was […] a ploy to justify the withdrawal from the merger without paying the agreed termination fee,” — the document states.

BitGo representatives said the audit of the financial statements was conducted within the required timelines in line with industry standards. Such aspects were not raised during negotiations.

The agreement also contemplated Galaxy Digital’s registration with the SEC.

The responsibility for the withdrawal and delays lay with the crypto bank, according to the lawyers.

“We strongly disagree with the statements in the document and have filed a motion to dismiss it,” — Galaxy Digital representatives told The Block.

Earlier in spring 2021, media reported about talks between the crypto bank and BitGo regarding a takeover. Later, the parties confirmed the information and put a value on the deal — around $1.2 billion in stock and cash.

In September, BitGo filed a lawsuit against Galaxy Digital for withdrawing from the merger, seeking damages of more than $100 million. That sum was cited as penalties for terminating the agreements.

By the end of the second quarter of 2022, Galaxy Digital’s cumulative loss stood at $554.7 million.

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