BitGo’s $100M Suit Against Galaxy Gets Green Light from Delaware Supreme Court

The Delaware Supreme Court has ruled in favor of BitGo by overturning a lower court’s dismissal of the company’s $100 million lawsuit against Galaxy Digital.

The lawsuit stems from a failed acquisition between the two entities.

In its filing on May 22 , the Delaware Supreme Court stated that the language used in the BitGo-Galaxy Digital $1.2 billion merger agreement was “ambiguous.”

The ambiguity led the court to reverse the decision made by the Delaware Chancery Court and open the opportunity for the consideration of additional evidence to resolve the ambiguity.

BitGo Can Pursue Legal Action Against Galaxy

The successful appeal, originally submitted on February 7, now gives BitGo another chance to pursue legal action against Galaxy Digital.

In the initial lawsuit filed in August 2022, BitGo accused Galaxy of an “intentional breach” of the acquisition agreement.

Galaxy had terminated the deal, claiming it had the right to do so after BitGo failed to provide audited financial statements from 2021.

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

The Delaware Court of Chancery had previously dismissed BitGo’s case with prejudice in June 2023.

Vice Chancellor J. Travis Laster determined that Galaxy had a “clean termination right” regarding the BitGo acquisition at that time.

In response to the recent decision by the Delaware Supreme Court, a spokesperson for Galaxy stated that the company would “continue to vigorously defend ourselves” and expressed confidence in the merits of their case.

Galaxy, led by Mike Novogratz, had announced its intention to acquire BitGo in May 2021 as part of its public offering in the United States.

However, in November 2022, as the cryptocurrency exchange FTX faced collapse, Galaxy disclosed approximately $77 million in exposure to FTX just before the exchange filed for bankruptcy.

Galaxy Continues to Expand

In 2023, Galaxy Asset Management was appointed by the FTX estate to assist with the selling, staking, and hedging of its crypto holdings.

Galaxy Asset Management serves as the institutional investment division of Galaxy Digital Holdings, which encompasses Global Markets and Digital Infrastructure Solutions.

Steve Kurz leads the division as the Global Head of GAM, which was established in 2018.

Despite a 4% decline in Galaxy Digital stock (GLXY) to $12.80 in after-hours trading, the shares have gained 23.5% since the beginning of the year.

The majority of these gains followed the approval of spot Bitcoin ETFs in mid-January.

However, the stock remains nearly 70% lower than its all-time high of $40 during the previous crypto market peak in November 2021.

More recently, Galaxy Asset Management’s global head Steve Kurz said he expects top wirehouses to increase their involvement in spot Bitcoin ETFs within the next year.

“I’d be surprised in the next year if the top 10 wirehouses are not involved in this… We will probably see institutional FOMO,” he told FOX Business on February 19 during the Exchange ETF Conference in Miami Beach, Florida.

The statement came as companies offering spot Bitcoin ETFs have been inundated with queries from financial advisers during the event.