BitGo’s Lawsuit Against Galaxy Digital Receives Approval from Delaware Supreme Court
BitGo’s $100 million lawsuit against Galaxy Digital has been given the green light by the Delaware Supreme Court, overturning a previous dismissal by a lower court. The lawsuit arose from a failed acquisition between the two companies. The Supreme Court stated that the language used in the merger agreement was ambiguous, leading to the reversal of the previous decision. This ruling now allows BitGo to pursue legal action against Galaxy Digital.
In the initial lawsuit filed in August 2022, BitGo accused Galaxy of intentionally breaching the acquisition agreement. Galaxy terminated the deal, claiming the right to do so after BitGo failed to provide audited financial statements from 2021. The successful appeal now gives BitGo another chance to proceed with the case.
“We believe justice prevailed on appeal, and we are delighted to move forward with this case in the Chancery Court,” said R. Brian Timmons, a partner at Quinn Emanuel, the law firm representing BitGo.
Previously, the Delaware Court of Chancery dismissed BitGo’s case in June 2023. Vice Chancellor J. Travis Laster determined that Galaxy had the right to terminate the acquisition at that time. In response to the recent decision, Galaxy expressed confidence in the merits of their case and stated that they would vigorously defend themselves.
Galaxy, led by Mike Novogratz, had announced its intention to acquire BitGo in May 2021 as part of its public offering in the United States. However, in November 2022, Galaxy disclosed significant exposure to the cryptocurrency exchange FTX just before its bankruptcy filing.
Despite a 4% decline in Galaxy Digital stock (GLXY) to $12.80 in after-hours trading, the shares have gained 23.5% since the beginning of the year. The majority of these gains followed the approval of spot Bitcoin ETFs in mid-January. However, the stock remains significantly lower than its all-time high of $40 in November 2021.
Galaxy Asset Management, the institutional investment division of Galaxy Digital Holdings, continues to expand. In 2023, they were appointed by the FTX estate to assist with the management of its crypto holdings. Steve Kurz leads the division as the Global Head of GAM.
Looking ahead, Kurz expects top wirehouses to increase their involvement in spot Bitcoin ETFs within the next year. He predicts institutional FOMO (fear of missing out) as companies offering spot Bitcoin ETFs have received numerous queries from financial advisers.
