- Galaxy Digital argues that it had a valid reason to terminate the merger agreement based on BitGo’s failure to deliver necessary documents.
- The Delaware Supreme Court found the term “financial statements” to be ambiguous.
The legal tussle between cryptocurrency custodian BitGo and financial services firm Galaxy Digital over their failed $1.2 billion merger deal will proceed, Coindesk reported. The Delaware Supreme Court overturned a lower court decision that dismissed BitGo’s lawsuit, giving them another chance to argue their case for a $100 million breach of contract settlement.
BitGo alleges that Galaxy intentionally abandoned the May 2021 merger agreement after suffering financial losses in the cryptocurrency bear market. They claim Galaxy could not afford the $1.2 billion price and used a technicality – BitGo’s alleged delay in providing specific audited financial statements – as an excuse to break the deal.
However, Galaxy argued that it had a “valid basis” to terminate the agreement due to BitGo’s failure to deliver the necessary documents. It considers BitGo’s lawsuit “without merit” and plans to defend its position.
See Related: Galaxy Digital Teams Up With Top Brazilian Asset Manager For Crypto ETFs
A Dispute Over Definitions
The legal matter centers on the interpretation of a single clause in the merger agreement. The Delaware Supreme Court found the definition of “financial statements” to be ambiguous. Both parties offered reasonable interpretations of what constituted acceptable documentation, leading the court to reverse the initial dismissal.
This case will be closely watched by the cryptocurrency industry, as it sets a precedent for resolving disputes arising from mergers and acquisitions in the volatile crypto market. The outcome could impact how future deals are structured and how potential ambiguities are addressed to avoid similar legal battles.
Meanwhile, Galaxy Digital is targeting distressed assets from other failed crypto companies, potentially including FTX’s own venture capital portfolio, the Financial Times reported. Affected by the market crash in 2022, the firm is now acting as a vulture capitalist for distressed crypto assets. This strategy helped propel Galaxy’s assets under management from $1.7 billion to a staggering $5.3 billion.