In a blog post on Monday, BitGo called Galaxy's actions "inappropriate," claiming a breach of contract and abandoning the agreement to acquire the data asset custodian. BitGo has hired the law firm Quinn Emanuel to take legal action against Galaxy for not paying "the $100 million reverse breach fee promised in March 2022."
According to Galaxy, as part of the acquisition agreement, BitGo failed to provide an audited financial report for 2021 by July 31, 2022, which was denied by QuinnEmanuel partner R. Brian Timmons:
"Mike Novogratz and Galaxy Digital attribute termination liability to BitGo for attempting to be ridiculous [...] Galaxy does not owe BitGo a $100 million termination fee as promised, or has been doing things in bad faith, facing this much or more in damages."
Galaxy announced its intention to acquire BitGo in May 2021 as part of a planned U.S. listing. After the extension at the end of the first quarter of 2022, Galaxy CEO Mike Novogratz said the company has "made some adjustments to the transaction" and expects the acquisition to take place between the second quarter and the fourth quarter of 2022.
[We believe BitGo will defend itself," a Galaxy spokesperson told Cointelegraph. [BitGo did not provide certain BitGo financial reports that Galaxy required to submit to the SEC. Galaxy shareholders subsequently decided to exercise their right to terminate the contract."
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It was unclear whether the recent market downturn was a factor in the deal's possible failure. Galaxy initially said it planned to pay about $1.2 billion in stock and cash in 2021. BitGo said on Monday that it had more than $64 billion in assets under custody by the end of 2021 and that "customer growth will continue until 2022."
