The case traces back to May 2021, when Galaxy Digital Holdings agreed to acquire Bitgo Holdings, a crypto custody and security firm. At the time, it was dubbed the largest deal in crypto industry history.

Galaxy terminated the agreement in August 2022. The company cited Bitgo’s failure to deliver audited financial statements for the fiscal year 2021 in a form that met the contractual standard. New U.S. Securities and Exchange Commission (SEC) staff accounting guidance had complicated crypto-related filings, and Galaxy maintained it had a clean termination right with no fee owed.

Bitgo disputed that position. According to Bloomberg, CEO Mike Belshe testified that Bitgo provided the required documentation and that Galaxy’s termination claims caused direct harm to the company. Bitgo is seeking at least the $100 million reverse breakup fee written into the merger agreement, and argues actual damages may exceed that figure.

“This was incredibly damaging,” Belshe is cited as saying in court, according to Bloomberg’s Sabrina Willmer.

Novogratz addressed several issues during his testimony. He stated that U.S. regulatory inquiries did not target Galaxy directly and had no bearing on the merger’s regulatory approval path. He also discussed Galaxy’s Luna trading profits of nearly $400 million, saying those sales were made to reduce risk.

Bitgo alleges Galaxy failed to use reasonable efforts to close the deal. The company also claims Galaxy withheld details of government inquiries that could have affected regulatory approvals, including potential SEC concerns tied to Galaxy’s activities. Bitgo contends Galaxy walked away after the deal became financially unattractive as crypto markets declined.

The legal path has been anything but direct. Bitgo filed suit in the Delaware Chancery Court in 2022. Vice Chancellor J. Travis Laster dismissed the case in June 2023, ruling Galaxy had a valid termination right because Bitgo’s financial statements did not comply with the agreement’s terms.

The Delaware Supreme Court reversed that ruling in May 2024. Justices found the merger agreement’s definition of “financial statements” was ambiguous and that both sides offered reasonable interpretations. The case was sent back to the lower court.

Proceedings have continued since, including discovery disputes. The trial before Chancellor Kathaleen St. Jude McCormick is now underway. No final ruling has been issued as of May 23, 2026.

The outcome rests on several issues: whether Galaxy met its contractual obligation to pursue the deal in good faith, whether Bitgo’s financial statements satisfied the agreement’s terms, and whether Galaxy had a disclosure obligation related to regulatory inquiries.

Possible outcomes include Galaxy paying the $100 million termination fee, a larger damages award, a settlement between the parties, or a ruling in Galaxy’s favor. The court, not a jury, will decide.

Despite the litigation, the two companies have collaborated on other initiatives, including staking. That detail has done little to resolve the core dispute over what happened to one of crypto’s biggest proposed deals.

The case is filed under C.A. No. 2022-0808 in the Delaware Chancery Court.

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