BitGo, a digital asset custodian is suing Galaxy Digital for more than $100 million as part of a “reverse break fee” for terminating an acquisition agreement.
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.
In order to take legal action against Galaxy for failing to pay a “$100 million reverse break fee, it had pledged back in March 2022,” BitGo has retained the services of the law firm Quinn Emanuel.
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.”
In May 2021, as part of its ambitions to IPO in the US, Galaxy declared its aim to buy BitGo. The acquisition was anticipated to close between Q2 and Q4 2022 after a delay at the end of the first quarter of 2022, during which Galaxy CEO Mike Novogratz claimed the company had “modified the agreement some.”
A representative for Galaxy digital told Cointelegraph, “We believe BitGo’s charges are without substance and we will defend ourselves fiercely.” “BitGo failed to deliver some BitGo financial statements that Galaxy required for its SEC filing. Following that, the Board of Directors of Galaxy decided to utilize its contractual right to terminate.
If the recent market collapse played a role in the sale possibly falling through, it is unclear. Initially, Galaxy claimed it would make a payment of about $1.2 billion in cash and stock in 2021.
At the end of 2021, the asset manager reported having more than $64 billion in assets under custody, and it added that “customer growth continues into 2022.”
