Crypto custodian BitGo wants to sue investment firm Galaxy Digital for more than $ 100 million after the latter unilaterally decided to terminate negotiations on a possible acquisition.
In the company’s own blog entry from yesterday, BitGo called the behavior of Galaxy as “inadmissible”, because the unilateral termination is a violation of the contract. The crypto custodian has therefore instructed the law firm Quinn Emanuel to sue Galaxy for a US $ 100 million contractual penalty, which the companies are said to have agreed on as part of their negotiations in March 2022.
According to Galaxy, however, the breach of contract is assumed by BitGo, because the company should not have submitted independently audited financial figures for the year 2021 as agreed by July 31, 2022. However, attorney Brian Timmons disagrees with this claim:
“The attempt by Mike Novogratz and Galaxy Digital to blame the breach of contract BitGo is absurd. […] Either Galaxy now owes BitGo a contractual penalty of 100 million US dollars or the investment company had no intention of buying from the beginning, and would have to make an even higher compensation payment.“
Galaxy had announced in May 2021 that a takeover of the crypto custodian is being sought as part of a planned IPO. After a delay in the first quarter of 2022, observers had actually assumed that the deal would be finalized sometime between Q2 and Q4 2022.
“We believe that BitGo’s accusations are baseless, which is why we will defend ourselves with all our might,” a Galaxy spokesperson told Cointelegraph. He adds: “BitGo failed to submit certain financial documents in time that Galaxy required for a corresponding application to the US Securities and Exchange Commission (SEC), whereupon the Galaxy Board of Directors exercised its right to terminate the negotiations prematurely.“
So far, it is unclear whether the ongoing crisis in the crypto market is a factor in the failed negotiations.