Digital asset trust and security company, BitGo, has filed a lawsuit against fellow crypto firm Galaxy Digital. BitGo is seeking $100 million in damages from the firm, for the deliberate breach of its merger agreement with BitGo and wrongful repudiation.
BitGo took to Twitter to announce the lawsuit filing.
According to the announcement, the lawsuit was filed at Delaware Chancery Court. Additionally, the filing will be made available to the public at 5 pm ET, Thursday, 15th of September.
Galaxy Digital entered into an agreement to acquire BitGo in a $1.2 billion deal. The deal was announced in May of 2021. As per the Twitter statement, California-based BitGo alleges that Galaxy Digital knowingly violated the terms of the agreement. BitGo announced plans to sue the crypto firm in August of this year. Additionally, according to the firm, the agreement did not terminate until December 31, 2022.
Why did Galaxy go back on its word to acquire the crypto custody firm?
The deal to acquire BitGo came to a standstill in March of 2022. At the time, Galaxy was awaiting the U.S. SEC (Securities and Exchange Commission) to recognize the company as being based in Delaware. Nonetheless, Galaxy still plans to list its shares on Nasdaq and currently trades its shares on the Toronto Stock Exchange.
Furthermore, the summer 2022 crypto market crash may have had a hand to play in further ruining the situation. Galaxy Digital suffered heavy losses in what is deemed as one of the worst crashes in crypto history. The firm’s Q2 2022 losses reached an eye-watering $555 million. Galaxy is a big Bitcoin (BTC) holder. Consequently, as the price of the asset plummeted, so did the profits for the company.
However, Mike Novogratz, CEO of Galaxy Digital, assured investors that the company was strong. Furthermore, he said that he was “proud” of Galaxy Digital’s “outperformance” during a challenging market and macroeconomic environment. Nonetheless, most crypto firms suffered, whether they admit it or not, during the crash.