Galaxy Digital Is Being Sued For Over $100 Million – BitGo Is Confident

Galaxy Digital is being sued for over $100 million, according to BitGo, a digital asset custodian, who claims that Galaxy, an investment company, owes the money as part of a “reverse break fee” for terminating an acquisition deal.

Galaxy Digital Is Being Sued For Over $100 Million

In a blog post on Monday, BitGo referred to Galaxy’s conduct as “improper,” accusing it of breach of contract for canceling a deal to buy the custodian of digital assets. Because BitGo needed to take legal action against Galaxy, for failing to pay the contractual fee of $100 million, also known as the “reverse break fee”, it (BitGo) retained the services from Quinn Emanuel, a law firm.

In accordance with the acquisition agreement, BitGo allegedly failed to deliver audited financial accounts for 2021 by July 31, 2022. Quinn Emanuel partner R. Brian Timmons refuted this assertion:

“The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd […] Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more.”

Galaxy’s Side Of The Story

Galaxy announced its intention to acquire BitGo in May 2021 as part of its plans to go public in the US. After a delay at the end of the first quarter of 2022, during which Galaxy CEO Mike Novogratz said the business had amended the deal somewhat, the acquisition was projected to conclude between Q2 and Q4 2022.

A spokesperson for Galaxy is reported as saying that BitGo’s claims are entirely without merit and that Galaxy will defend itself vigorously. They further stated that BitGo didn’t provide the financial statements needed for the SEC filing (as mentioned above), and that because of that the Board of Directors (of Galaxy) made the hard decision to exercise their contractual right to terminate the agreement.

Do We Know The Real Reasons?

If the recent market collapse played any kind of a role in the sale possibly falling, it is unknown. Initially, Galaxy said it would make a payment of about $1.2 billion in cash and shares in 2021. At the end of last year, BitGo reported having more than $64 billion in assets under custody, and it also added that customer growth will continue into 2022.

Whatever the reasons behind Galaxy’s termination of the contract, it would appear that BitGo is gearing up for a protracted legal battle where it will either be seeking a termination fee or will sue for damages that may amount to an amount higher than the $100 million termination fee under the agreement.

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