BitGo Sues Galaxy Digital for $100 Million Over Failed $1.2 Billion Crypto Merger

TL;DR: BitGo filed a lawsuit in Delaware Chancery Court seeking at least $100 million from Galaxy Digital after the latter withdrew from a $1.2 billion merger agreement in 2022. BitGo says Galaxy’s public reason for ending the deal harmed its reputation by implying it could not complete an audit.

Context: The merger was first announced in May 2021 and valued at $1.2 billion. Under the terms, BitGo’s co‑founder Mike Belshe would have become Galaxy’s deputy CEO and the combined entity planned a Nasdaq listing requiring SEC approval. As crypto markets weakened in 2022 and regulatory scrutiny rose, both firms grew concerned the SEC would block the transaction. Galaxy explored a Canadian restructuring to avoid U.S. hurdles but ultimately terminated the deal in August 2022, citing BitGo’s missed July 31 deadline for audited 2021 financial statements.

Key Facts: BitGo claims Galaxy withdrew without making reasonable efforts to close the deal and concealed information about U.S. investigations that could have affected regulatory clearance. Galaxy’s CEO Michael Novogratz denied the allegations, saying the probes did not involve Galaxy and had no impact on the merger’s approval process. During testimony, Belshe called Galaxy’s public explanation for terminating the merger “incredibly damaging,” arguing it created the false impression that BitGo could not complete an audit. BitGo is now seeking at least $100 million in damages. Market data shows Galaxy Digital (TSX: GLXY) shares slipped about 4% intraday after the lawsuit disclosure, trading near CAD 4.15 and giving the firm a market cap of roughly CAD 950 million.

What It Means: The lawsuit hinges on whether Galaxy’s termination was justified under the merger agreement’s audit deadline clause and whether its public statements constituted reputational harm to BitGo. A ruling could set a precedent for how crypto firms handle material adverse change claims and audit obligations in high‑value M&A deals. Investors will watch for the court’s decision on damages and any potential settlement, as well as the ensuing effect on Galaxy’s stock price and BitGo’s future fundraising prospects.