Delaware Court Dismisses BitGo Case, Favors Galaxy

Delaware Court Dismisses BitGo Case, Favors Galaxy
In a recent development, the Delaware Court of Chancery in the United States has ruled in favor of crypto investment firm Galaxy Digital.

The court has granted a motion that resulted in the dismissal of a case brought against them by digital asset custodian BitGo. This legal action stemmed from the abandoned acquisition of BitGo by Galaxy Digital in the year 2022.

As per court documents filed on June 9, Vice Chancellor J. Travis Laster made a decisive move by dismissing BitGo's complaint against Galaxy Digital. Importantly, the dismissal was made with prejudice, indicating that the case cannot be refiled. 

This ruling comes in the wake of Galaxy Digital's withdrawal from the proposed acquisition of BitGo in August 2022. The planned deal, worth $1.2 billion, was abandoned by Galaxy Digital due to alleged breaches of contract. In response, BitGo took legal action against Galaxy Digital, seeking $100 million in damages.

Vice Chancellor J. Travis Laster's ruling highlighted that Galaxy Digital possessed a "clean termination right" regarding the BitGo acquisition. This right was justified, at least in part, by BitGo's failure to provide specific financial statements during its attempt to go public in the United States. Following the court's decision to dismiss BitGo's claims, a spokesperson from Galaxy Digital expressed satisfaction, stating that the company was pleased with the outcome.

Laster emphasized that no facts were presented that could reasonably suggest that the exercise of the termination right by Galaxy Digital was in violation of the implied covenant of good faith and fair dealing. His statement implies that the termination was justified within the framework of the contractual agreement between the parties.

Under the leadership of Mike Novogratz, Galaxy Digital made its intentions clear in May 2021 to acquire BitGo as part of its public offering in the United States. Unfortunately, the deal between the two entities unraveled in 2022. 

During this period, BitGo disclosed a significant financial exposure of $77 million to the failed crypto exchange FTX, which subsequently declared bankruptcy in November.

The legal options available to BitGo following the Delaware court's decision remain uncertain. 

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