thecoinrise.com
Contrary to initial plans, Galaxy Digital decided to halt its planned acquisition of BitGo, an institutional digital assets company. The merger agreement between BitGo and Galaxy Digital was decided and announced in May 2021. This was several months after BitGo had been searching for a buyer. The ‘merger and acquisition’ was worth about $1.2 billion at the time.
In detail, the value of the acquisition was meant to be a combination of stocks and shares. Cash worth $265 million was meant to be paid while the rest would be newly issued Galaxy Digital shares.
As part of the perks of the merger, BitGo is billed to receive approximately 10% of Galaxy’s shares. In addition, Mike Belshe, the CEO and co-founder of BitGo is meant to join Galaxy Digital as the Deputy CEO and a member of the board of directors.
Based on the terms of the agreement, if Galaxy Digital pulls out of the agreement, it would have to pay a $100 million severance fee to BitGo. Now that it has made the decision to terminate its contract, BitGo is insisting that Galaxy Digital pays for damages and inconveniences in excess of $100 million.
BitGo Request Payment For Damages
The digital asset trust company, BitGo regards Galaxy’s move as ‘improper’ and is planning to go through with a legal proceeding if Galaxy refuses to comply with its request.
In its defense, Galaxy pointed out that its decision to terminate the contract was due to BitGo’s “failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement.” Therefore, no termination or contract reversal fee will be paid in return.
Responding to Galaxy’s push of blame on BitGo, R. Brian Timmons the Global Head of Complex Litigation at Quinn Emanuel explained that “the attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd.”
Meanwhile, Galaxy is still seeking more funds to get involved in more mergers and acquisitions. Even its $554 million loss in the second quarter is not deterring the investment firm. Galaxy Digital stated that it still has $1 billion at hand and is keen on raising more capital to close additional deals.