BitGo $100M Lawsuit Against Galaxy Digital to Dismissal Reverse by Court

The Delaware Supreme Court has overturned a lower court ruling that dismissed a $100 million lawsuit filed by digital asset firm headquartered in Paolo Alto, BitGo, against Galaxy Digital, marking a significant development in the ongoing legal battle between the two cryptocurrency firms following a failed acquisition deal.

In a filing dated May 22, the Supreme Court of the State of Delaware identified ambiguity in the language of the $1.2 billion merger agreement between BitGo and Galaxy Digital, which Galaxy terminated in August 2022. 

BitGo and Galaxy Digital Lawsuit

The state supreme court’s decision to reverse the Delaware Chancery Court’s earlier ruling opens the door for BitGo to refile its suit against Galaxy Digital, enabling further legal scrutiny to resolve the identified ambiguities.

The successful appeal, initially submitted on February 7, provides BitGo with another opportunity to pursue its claims against Mike Novogratz’s Galaxy Digital. BitGo’s August 2022 lawsuit accused Galaxy of an “intentional breach” of the acquisition agreement. At that time, Galaxy justified its decision to terminate the deal by asserting that BitGo failed to deliver the required audited financial statements for 2021.

Delaware Court of Chancery Dismissed the BitGo Case

Previously, the Delaware Court of Chancery had dismissed the BitGo case with prejudice in June 2023. Vice Chancellor J. Travis Laster ruled that Galaxy had a “clean termination right” in ending the acquisition. 

In light of the Supreme Court’s recent decision, a Galaxy spokesperson reiterated to Cointelegraph that the firm remains committed to vigorously defending itself, expressing confidence in the merits of their case.

Details of the Conflict

The conflict dates back to May 2021 when Galaxy Digital, led by Mike Novogratz, announced its intention to acquire BitGo, which recently secured $100 million in a Series C funding round, as part of its strategy to go public in the United States. However, the relationship between the two companies soured, culminating in the termination of the deal in August 2022. 

This legal dispute was further complicated by Galaxy’s disclosure in November 2022 of approximately $77 million in exposure to the now-bankrupt cryptocurrency exchange FTX.

High-Stake in M&As in Crypto Sector

The Supreme Court’s ruling highlights the complex legal landscape surrounding high-stakes mergers and acquisitions in the cryptocurrency industry. The reversal of the Chancery Court’s decision not only rejuvenates the BitGo legal battle but also sets a precedent for the examination of contract ambiguities and the importance of precise legal language in merger agreements.

As the case returns to the Chancery Court, both BitGo and Galaxy Digital are poised to present further evidence and arguments to support their positions. This ongoing legal saga is being closely watched by industry stakeholders, as its outcome could have far-reaching implications for future mergers and acquisitions within the rapidly evolving cryptocurrency sector.