BitGo has filed a lawsuit against crypto financial services firm Galaxy Digital.
The California-based institutional digital asset financial services company is seeking more than $100 million in damages as it claims that Galaxy Digital intentionally breached the companies’ proposed $1.2 billion merger agreement announced in May last year.
On May 5 2021, Galaxy announced plans to acquire custodian provider BitGo for $1.2 billion in cash and stock.
However, last month on August 15, Galaxy terminated its deal to acquire BitGo, something that did not go with the other party. BitGo immediately responded, saying it would seek $100 million in damages following the termination of its merger with Galaxy Digital.
In a tweet yesterday, BitGo announced: “Late yesterday, BitGo filed a lawsuit against Galaxy Digital seeking damages of more than $100 million arising from Galaxy’s improper repudiation and intentional breach of its merger agreement with BitGo.”
The crypto custody firm further said that the complaint was filed in Delaware Chancery Court and will be made available to the public on Thursday, September 15.
In a statement, BitGo disclosed its intention to sue Galaxy, describing the termination of the deal as “absurd.”
What Caused the Failed Merger Deal?
On August 15, Galaxy Digital announced that the firm terminated a proposed $1.2 billion stock and cash deal that would allow the crypto company to acquire the digital asset custody business and financial services provider BitGo. Galaxy detailed that the abandoned deal was due to BitGo’s “failure to deliver” specific financial documents.
Galaxy said it exercised its right to terminate its previously announced acquisition deal with BitGo, following BitGo’s failure to deliver by July 31 audited financial statements for 2021 that comply with the requirements of the proposed agreement. Galaxy further stated: “No termination fee is payable in connection with the termination.”
The news of the failed merger came only a week after Galaxy reported a second-quarter net loss of $554.7 million following a plunge in the value of cryptocurrencies.
The financial losses followed Galaxy’s exposure to the collapse of TerraUSD algorithmic stablecoin in mid-May.
The collapse of the Terra blockchain ecosystem hit confidence in cryptocurrencies. Several crypto lending firms such as Celsius Networks, Voyager Digital, Vauld, Zipmex, Babel Finance, among others, were forced to stop customer withdrawals, and many became bankrupt.
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