Galaxy reportedly considered restructuring the acquisition through Canada as concerns mounted over possible opposition from the US Securities and Exchange Commission.
BitGo and Galaxy Digital remain locked in a legal dispute over the failed $1.2 billion acquisition agreement that was once expected to become the largest merger in the cryptocurrency industry.
During hearings this week at Delaware Chancery Court, BitGo argued that Galaxy improperly abandoned the transaction in 2022 and is now pursuing at least $100 million in damages, according to reports from Bloomberg.
Dispute Over Regulatory Issues and Deal Obligations
BitGo claims Galaxy failed to make sufficient efforts to complete the merger and also withheld information regarding investigations by United States authorities that may have complicated regulatory approval for the deal.
Michael Novogratz rejected those accusations during testimony, arguing that the investigations in question did not involve Galaxy itself and therefore had no impact on the approval process connected to the acquisition.
The merger was originally announced in May 2021. Under the proposed arrangement, BitGo co founder and CEO Mike Belshe was expected to join Galaxy Digital as deputy chief executive officer while also securing a seat on the company’s board of directors.
The combined company also planned to list shares on the Nasdaq stock exchange, a process that required approval from the US Securities and Exchange Commission.
However, the transaction encountered growing difficulties in 2022 as crypto markets weakened and regulators intensified oversight of the digital asset industry.
According to testimony presented in court, both firms eventually became increasingly concerned that the SEC, which at the time was led by Gary Gensler, might refuse to approve the merger.
Novogratz stated that Galaxy even explored the possibility of restructuring the transaction through Canada in an attempt to bypass potential SEC related obstacles. Galaxy was already publicly listed in Canada at the time.
Disagreement Over Missed Audit Deadline
Galaxy officially terminated the acquisition agreement in August 2022.
At the time, the company stated that BitGo failed to deliver audited financial statements for 2021 before a July 31 deadline specified in the merger contract. Galaxy argued that the missed deadline released it from any obligation to pay a termination fee.
BitGo has consistently disputed those claims and maintains that the required financial documents were submitted properly.
During testimony earlier this week, Belshe said Galaxy’s public explanation for abandoning the deal caused significant reputational harm because it created the impression that BitGo had been unable to complete a proper audit process.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
