Delaware Supreme Court Approves BitGo’s $100 Million Lawsuit Against Galaxy

The Delaware Supreme Court has ruled in favor of BitGo by reversing a lower court’s dismissal of the company’s $100 million lawsuit against Galaxy Digital.

This lawsuit originates from an unsuccessful acquisition attempt between the two parties.

In its ruling on May 22, the Delaware Supreme Court indicated that the wording in the BitGo-Galaxy Digital $1.2 billion merger agreement was “ambiguous.”

This ambiguity prompted the court to overturn the decision made by the Delaware Chancery Court and allow for the consideration of additional evidence to clarify the ambiguity.

BitGo Can Pursue Legal Action Against Galaxy

The successful appeal, initially filed on February 7, now provides BitGo with another opportunity to pursue legal action against Galaxy Digital.

In the original lawsuit submitted in August 2022, BitGo accused Galaxy of an “intentional breach” of the acquisition agreement.

Galaxy had terminated the agreement, asserting it had the right to do so after BitGo did not provide audited financial statements for 2021.

“We believe justice prevailed on appeal, and we are pleased to proceed with this case in the Chancery Court,” R. Brian Timmons, a partner at the law firm Quinn Emanuel representing BitGo, stated.

The Delaware Court of Chancery had previously dismissed BitGo’s case with prejudice in June 2023.

Vice Chancellor J. Travis Laster concluded that Galaxy had a “clean termination right” concerning the BitGo acquisition at that time.

In response to the recent ruling by the Delaware Supreme Court, a spokesperson for Galaxy remarked that the company would “continue to vigorously defend ourselves” and expressed confidence in the strength of their case.

Galaxy, under the leadership of Mike Novogratz, had announced its plan to acquire BitGo in May 2021 as part of its public offering in the United States.

However, in November 2022, as the cryptocurrency exchange FTX was on the verge of collapse, Galaxy revealed approximately $77 million in exposure to FTX just prior to the exchange filing for bankruptcy.

Galaxy Continues to Expand

In 2023, Galaxy Asset Management was appointed by the FTX estate to assist with the selling, staking, and hedging of its cryptocurrency holdings.

Galaxy Asset Management functions as the institutional investment division of Galaxy Digital Holdings, which includes Global Markets and Digital Infrastructure Solutions.

Steve Kurz heads the division as the Global Head of GAM, which was founded in 2018.

Despite a 4% drop in Galaxy Digital stock (GLXY) to $12.80 in after-hours trading, the shares have increased by 23.5% since the start of the year.

The majority of these gains occurred following the approval of spot Bitcoin ETFs in mid-January.

Nonetheless, the stock remains nearly 70% lower than its all-time high of $40 during the previous crypto market peak in November 2021.

More recently, Galaxy Asset Management’s global head Steve Kurz indicated he anticipates that leading wirehouses will enhance their participation in spot Bitcoin ETFs within the next year.

“I’d be surprised in the next year if the top 10 wirehouses are not involved in this… We will probably see institutional FOMO,” he told FOX Business on February 19 during the Exchange ETF Conference in Miami Beach, Florida.

This statement was made as companies offering spot Bitcoin ETFs faced a surge of inquiries from financial advisers during the event.

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