Delaware’s Supreme Court has overturned a previous ruling from a lower court, allowing BitGo to proceed with its $100 million lawsuit against Galaxy Digital following a failed acquisition.
Supreme Court Finds Ambiguity in Merger Agreement
On May 22, the Supreme Court of Delaware ruled that the language in the $1.2 billion merger agreement between BitGo and Galaxy Digital, which Galaxy terminated in August 2022, was “ambiguous.” This decision reverses the Delaware Chancery Court’s 2023 dismissal of BitGo’s lawsuit. The state supreme court instructed the lower court to consider extrinsic evidence to resolve the ambiguity in the merger agreement.
BitGo’s Allegations and Legal Proceedings
BitGo filed an appeal on February 7, contesting the Chancery Court’s dismissal of its lawsuit. The firm had accused Galaxy Digital of an “intentional breach” of the acquisition agreement. Galaxy had argued it was entitled to terminate the deal due to BitGo’s failure to provide audited financial statements for 2021.
Following the Supreme Court’s ruling, R. Brian Timmons, a partner at Quinn Emanuel representing BitGo, expressed optimism: “We believe justice prevailed on appeal and we are delighted to move forward with this case in the Chancery Court.”
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Previous Dismissal and Galaxy’s Defense
The Delaware Court of Chancery had dismissed BitGo’s case in June 2023, with Vice Chancellor J. Travis Laster asserting that Galaxy had a “clean termination right” regarding the acquisition. In response to the recent Supreme Court decision, a Galaxy spokesperson stated that the firm would “continue to vigorously defend ourselves” and remains “confident in the merits of our case.”
Background of the Acquisition and Market Impact
Galaxy Digital, led by Mike Novogratz, announced its intention to acquire BitGo in May 2021 as part of its public offering in the United States. The failed acquisition occurred amid significant market turmoil, including the collapse of cryptocurrency exchange FTX in November 2022, where Galaxy disclosed approximately $77 million in exposure.
With the Supreme Court’s ruling, BitGo now has another opportunity to pursue its claims against Galaxy Digital. The upcoming proceedings in the Delaware Chancery Court will likely focus on interpreting the ambiguous terms of the merger agreement and examining any pertinent extrinsic evidence.
