The crypto world is getting quite litigious in recent months. Indeed, the industry is seeing a flood of lawsuits in the aftermath of the market’s freefall in May. Joining the pack of court complaints now is BitGo, taking on its one-time business partner Galaxy Digital (OTCMKTS:BRPHF). After a merger agreement and collapse, BitGo is detailing the new complaint this week.
To say legal fights in crypto are frequent would be an understatement. New suits are being brokered every week, though these suit are often brought on by regulators or investors rather than the companies themselves. For example, the Securities & Exchange Commission (SEC) has remained busy in this realm. Atop its Ripple (XRP-USD) lawsuit, the SEC is going after a grip of defendants for alleged illegal operations. Investors have been taking on companies a lot more recently through class action lawsuits, as is the case with Solana (SOL-USD) or Coinbase (NASDAQ:COIN).
But now, it seems as though the market crash has pushed many companies to take out their financial woes on each other. In the last several months, crypto companies have suing each other with increasing frequency. One of the most prominent suits between companies are KeyFi’s suit against Celsius (CEL-USD), as well as Celsius’s own countersuit. Gemini also found itself embroiled in a suit with IRA Financial Trust over alleged stolen assets.
Mike Novogratz’s Galaxy Digital appears to be the next company defending itself in court at the hands of crypto custodian BitGo. A merger plan between the two is apparently falling through, and Galaxy Digital could be on the hook for a hefty sum if the suit is successful.
Galaxy Digital Facing BitGo Lawsuit After Allegedly Breaking Merger Agreement
Galaxy Digital could be on the hook for a whopping $100 million, according to BitGo. The latter company is announcing its newly opened suit against its former peer on Twitter today.
The thread, published early this morning, does not go into much detail. BitGo says the lack of details as of right now is due to an “abundance of caution in the event … Galaxy contends otherwise” and wants to redact information prior to the lawsuit becoming public. All investors know thus far is the suit accuses Galaxy Digital of “improper repudiation and intentional breach” of its merger agreement with BitGo.
In May of 2021, the news of Galaxy Digital’s plans to acquire BitGo made for some big headlines. Galaxy Digital is one of the most notable crypto investing companies, thanks in large part to its reputable owner Mike Novogratz and its very deep reserve of Bitcoin holdings.
While the acquisition remained quiet for the next year, things totally soured in mid-August of this year. Galaxy Digital decided to drop the acquisition outright. The company delivered a statement in which it accused BitGo of violating the terms of the agreement by failing to deliver on its 2021 financial statements by an agreed-upon deadline. While the company agreed to pay a $100 million termination fee in the event the merger doesn’t play out by the end of 2022, Galaxy Digital said in this statement the fee was no longer applicable due to the contract breach.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
