BitGo Lawsuit Against Galaxy Digital Allowed by Court to Continue

Key Points:

• The Delaware Supreme Court has reversed an earlier ruling, allowing BitGo lawsuit against Galaxy Digital to continue.
• The court found the merger agreement’s language ambiguous, requiring extrinsic evidence to resolve the dispute regarding audited financial statements.

According to CoinDesk, BitGo has been granted a new opportunity to pursue legal action against Galaxy Digital over their aborted $1.2 billion merger agreement.

Delaware Supreme Court Revives BitGo Lawsuit Against Galaxy Digital

The development follows the Delaware Supreme Court’s decision to overturn a previous ruling that dismissed BitGo’s $100 million lawsuit against Galaxy Digital.

The Supreme Court’s May 22 decision shows the ambiguity in the merger agreement’s language and the need for extrinsic evidence to resolve the dispute. This ruling reverses the June 2023 decision by the Delaware Court of Chancery, which had ruled in favor of Galaxy Digital by their “clean termination right” due to BitGo’s delay in providing audited financial statements for 2021.

R. Brian Timmons, a partner at Quinn Emanuel, the law firm representing BitGo, expressed satisfaction with the Supreme Court’s decision, stating, “We believe justice prevails on appeal, and we are delighted to move forward with this case in the Chancery Court.”

BitGo Alleges Intentional Breach as Galaxy Defends Termination Decision

Initially, BitGo lawsuit appeared in August 2022, accusing Galaxy Digital of an “intentional breach” of the acquisition agreement. BitGo sought $100 million in damages, citing that Galaxy backed out of the deal due to financial difficulties amid the crypto bear market rather than any fault of BitGo’s. Conversely, Galaxy maintains that its decision to terminate the merger was justified by BitGo’s failure to provide necessary audited financial statements on time.

The merger, announced by Galaxy CEO Mike Novogratz in May 2021, was called off in August 2022. The dissent centers on the interpretation of financial statements required under the agreement.

Delaware Chancery Court Vice Chancellor J. Travis Laster initially ruled in favor of Galaxy, citing non-compliant financial documents provided by BitGo. However, the Supreme Court’s recent ruling identified the definition of financial statements as ambiguous, necessitating further examination and thus reviving BitGo lawsuit.