Galaxy Digital, the crypto merchant bank led by Mike Novogratz, has been vindicated in its decision to terminate its $1.2 billion acquisition of crypto custodian BitGo. Last week, Delaware Chancery Court Vice Chancellor James Laster ruled that Galaxy had a valid basis to end the deal due to BitGo providing non-compliant documents pertaining to its financial health. There are no facts alleged that could make it reasonably conceivable that the exercise of the termination right was inconsistent with the implied covenant of good faith and fair dealing, Judge Laster said in the ruling.
BitGo has since responded to the judge’s decision, stating that they plan to appeal and that they still believe Galaxy wrongfully terminated the agreement. The two companies had initially agreed to the deal in May 2021, with Galaxy looking to become a one-stop shop for prime brokerage services geared toward institutional investors. However, with the crypto bear market in full swing, Galaxy ultimately called off the merger in August 2022, citing BitGo’s withholding of audited financial statements. BitGo then sued for $100 million in damages, claiming Galaxy pulled out because it could no longer afford the purchase after racking up hundreds of millions in losses during the bear market.