Quick Take:

• Delaware Supreme Court overturns lower court’s decision, granting BitGo opportunity to sue Galaxy Digital.
• BitGo seeks $100 million in damages over failed $1.2 billion merger agreement.
• Galaxy Digital blames breakup on BitGo’s alleged failure to provide timely financial statements.
• Ruling underscores ambiguity in merger agreement’s financial statement definition.

Main Article:

BitGo, a prominent cryptocurrency custodian, has been granted a renewed opportunity to pursue legal action against financial services firm Galaxy Digital following a ruling by the Delaware Supreme Court. The decision marks a significant development in BitGo’s ongoing $100 million lawsuit against Galaxy Digital, stemming from their failed $1.2 billion merger agreement.

“We believe justice prevailed on appeal, and we are delighted to move forward with this case in the Chancery Court,” stated R. Brian Timmons, partner at Quinn Emanuel, the law firm representing BitGo in this matter.

BitGo initiated the lawsuit against Galaxy Digital in August 2022, alleging that Galaxy deliberately breached the merger agreement in May 2021. BitGo contends that Galaxy, facing substantial financial losses during the crypto bear market, reneged on the deal after realizing it could no longer afford the $1.2 billion price tag. In response, Galaxy refuted BitGo’s claims, attributing the breakup to BitGo’s purported failure to furnish certain audited financial statements promptly.

Last June, Delaware Chancery Court Vice Chancellor J. Travis Laster ruled in favor of Galaxy, determining that the firm had valid grounds to terminate the agreement due to BitGo’s submission of “non-compliant” financial documents.

BitGo’s appeal of this ruling proved successful, as the Delaware Supreme Court found ambiguity in the merger agreement’s definition of “financial statements.” The court concluded that both BitGo and Galaxy presented reasonable interpretations of acceptable documentation, prompting a reversal of the earlier decision.

Galaxy Digital remains resolute in its stance, expressing confidence in the merits of its position in the ongoing legal dispute. A spokesperson for Galaxy reaffirmed the company’s commitment to vigorously defend itself against BitGo’s claims.

As the case proceeds, the cryptocurrency industry watches closely, recognizing the implications of this legal battle for future mergers and acquisitions within the sector. The ruling’s acknowledgment of ambiguity in contractual language underscores the importance of clarity and precision in drafting agreements within the dynamic landscape of crypto finance.