The BitGo custodial service sued investment firm Galaxy Digital in Delaware Chancellor’s Court for rejecting the planned merger, demanding $100 million in compensation.
Last May, Galaxy Digital announced plans to acquire the BitGo service for $1.2 billion. Given that the service supports the storage of more than 400 cryptocurrencies, the acquisition would have allowed Galaxy to significantly increase its customer list and expand geographically. However, in April, Galaxy management postponed the deal until late 2022 due to personnel changes as BitGo hired around 150 new employees. In mid-August, Galaxy backed out of the deal altogether. As the company explained, BitGo had not provided financial statements for 2021 by 31 July 2022, according to the terms of the agreement.
The BitGo service recently warned the company that it would claim $100 million in damages for wrongful breach of agreement. However, Galaxy said it would not pay compensation for pulling out of the deal. This could be because the company reported losses of $554 million in Q2 2022, a week before it pulled out of the deal to acquire the service. BitGo alleges that Galaxy deliberately breached the merger agreement, and the service has moved from cautions to sue.
According to attorney Brian Timmons of law firm Quinn Emanuel, which represents BitGo, the complaint was filed in secret, despite the lack of confidential information. This was done as a precaution in case Galaxy wished to redact any confidential information in the coming days. The company said the complaint would be available for review as early as Thursday.
Recall that several years ago, according to media reports, payment giant PayPal also held talks to buy BitGo’s custodial service, but they proved unsuccessful.
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