Galaxy Digital Holdings Ltd. (TSX: GLXY) run by the well known Mike Novogratz, has announced that the company will be reorganizing to become a Delaware-based company along with terminating their deal to acquire BitGo, an institutional digital asset platform.
Galaxy, which is headquartered in New York and has offices in Chicago, New Jersey, London, Amsterdam, Hong Kong, Tokyo, and the Cayman Islands, called off the deal due to claims that BitGo did not provide audited financial statements by the agreed upon date of July 31st, 2022.
However the same day Galaxy made their announcement, BitGo responded with plans to sue Galaxy for breaching the $1.2 billion merger agreement. BitGo is now seeking $100 million in damages from Galaxy.
In BitGo's own press release, the company claims that Galaxy is refusing to pay the breakup fee that was originally agreed upon. BitGo hired law firm Quinn Emanuel to pursue the necessary legal steps.
R. Brian Timmons, a partner with Quinn Emanuel, stated that “The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd.”
Timmons also pointed out Galaxy's recent losses that range in the hundreds of millions of dollars.
“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,” Timmons said.
A spokesperson for Galaxy countered that “BitGo's claims are without merit and we will defend ourselves vigorously. As previously stated, BitGo did not provide certain BitGo financial statements needed by Galaxy for its SEC filing.”
These recent developments could potentially delay the process for Galaxy's proposed reorganization. Galaxy first announced in March 2021 that the company would move from being listed on the Toronto Stock Exchange (TSX) to the more well known and more accessible (for U.S. and Global investors) NASDAQ Stock Exchange.
Despite the delays, Galaxy is still working toward being listed on the NASDAQ.
Novogratz stated that “Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”