Institutional digital assets company BitGo has hit back at Galaxy Digital Holdings over its decision to terminate the merger agreement between both companies. Yesterday, Galaxy Digital revealed it had terminated its acquisition of BitGo due to its failure to submit audited financial statements for 2021 by the deadline. The digital asset and crypto firm, which recently gained FINRA approval, said it would not pay any termination fees regarding its withdrawal.
BitGo to Sue Galaxy Digital Holdings Over Deal
In a statement issued yesterday, BitGo said it would seek legal recourse against Galaxy Digital for its decision to withdraw from the merger. It cited that the deal was not due to expire until at least December 31, 2022. Furthermore, it accused Galaxy Digital of reneging on the $100 million break fee it pledged back in March 2022 to extend the merger agreement.
Consequently, the institutional digital assets firm said it had hired the services of litigation juggernaut, Quinn Emanuel, to pursue the necessary legal proceedings. Speaking on the situation R. Brian Timmons, a partner with Quinn Emanuel, called Galaxy Digital’s stance that BitGo was responsible for the termination absurd.
He further highlighted that it was public knowledge that Galaxy Digital recorded a loss of $500 million in the last quarter. And while the company’s stock performed poorly, it was further distracted by the Luna debacle that led to a drastic fall in the prices of digital assets. He said:
“The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd. BitGo has honored its obligations thus far, including the delivery of its audited financials. It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco. Either Galaxy owes BitGo a $100 million termination fee as promised, or it has been acting in bad faith and faces damages of that much or more.”
On his part, BitGo’s CEO Mike Belshe noted that his company’s business has continued to grow while its operational outlook remains strong. The company ended 2021 with over $64B in assets in custody while growing three times over year on year. He added that 2021 saw robust client growth, which continues in 2022. Hence BitGo would focus on delivering on its mission.
Finally, Belshe revealed that BitGo had an expanding line of products and services which made him bullish on its future. He said:
“We have an expanding pipeline of product launches, and we are dedicating even more resources to building institutional-grade products and services for our clients and the industry. We are now turning 100% of our focus to these exciting initiatives for the benefit of our clients, shareholders, and employees. I have never been more bullish about our future.”
The Galaxy Digital BitGo Merger Deal
In May 2021, Galaxy Digital announced its plan to buy BitGo for $1.2 billion. If the transaction had been successful, it would have been one of the biggest in the cryptocurrency market. Galaxy Digital would have acquired over 400 new clients worldwide, enabling the company to grow internationally.
According to the terms of the agreement, BitGo stockholders would get $33.8 million in newly issued Galaxy Digital common shares and about $265 in cash. However, the deal had yet to close a year since the announcement.
Consequently, both companies renegotiated the terms of the agreement after the decline in the value of Galaxy shares as the crypto market plummeted. The Toronto-listed Galaxy Digital planned to finalize the deal after its domestication as a Delaware corporation, a process still undergoing an SEC review.
This article originally appeared on The Tokenist
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