In a significant legal development, the Delaware Court of Chancery has ruled in favour of crypto investment firm Galaxy Digital, dismissing the lawsuit filed by digital asset custodian BitGo. The case arose from Galaxy’s decision to abandon the acquisition of BitGo in 2022, which had been part of a substantial $1.2-billion deal.
Vice Chancellor J. Travis Laster, overseeing the case, dismissed BitGo’s complaint against Galaxy Digital with prejudice, solidifying the notion that the termination of the acquisition was justified.
The court found that Galaxy had a “clean termination right” based on BitGo’s failure to provide essential financial statements as required for its intended public offering in the United States. This failure amounted to a breach of contract, fully justifying Galaxy’s withdrawal from the deal.
Galaxy Digital expressed satisfaction with the court’s decision, as a spokesperson for the company stated, “We are pleased with the court’s ruling, which validates our position and dismisses BitGo’s baseless claims against us.” The court’s ruling emphasized that there was no evidence to support BitGo’s allegations that the termination of the acquisition violated the implied covenant of good faith and fair dealing.
Galaxy Digital, led by renowned investor Mike Novogratz, had initially announced its intention to acquire BitGo in May 2021 as part of its plans for a public offering in the United States. However, in 2022, the BitGo deal collapsed, coinciding with BitGo’s revelation of a $77 million exposure to the bankruptcy of the failed crypto exchange FTX.
BitGo sought $100 million in damages from Galaxy Digital through its lawsuit. Nevertheless, with the court’s decision, BitGo’s case has been largely dismissed, highlighting the importance of upholding contractual obligations and the consequences of their breach.
While this legal dispute has now concluded, both Galaxy Digital and BitGo continue to navigate the ever-evolving landscape of the cryptocurrency industry. Adapting to the challenges and opportunities this rapidly expanding sector presents, these companies remain focused on their respective endeavors.
As the crypto market evolves, the Delaware Court of Chancery ruling sets a precedent for contractual integrity, bolstering investor confidence in the industry. It serves as a reminder that businesses must fulfill their obligations and act in good faith, ultimately contributing to the overall maturation of the digital asset ecosystem.
