Galaxy, BitGo revive $100M claim in Delaware court fight

Michael Novogratz’s Galaxy Digital and crypto custodian BitGo faced off in Delaware Chancery Court over BitGo’s effort to recover at least $100 million from the failed breakup of their $1.2 billion merger, reviving a dispute from one of crypto’s largest abandoned deals. The hearing, reported by Bloomberg, returned the 2022 collapse to court as both sides argued over whether Galaxy had a contractual basis to walk away.

The case still carries weight for crypto dealmaking because it tests how much liability can remain after a takeover fails. Delaware is being asked to sort out whether a missed filing deadline ended the merger on its own, or whether the market selloff that tore through digital assets in 2022 had already changed the economics.

Galaxy agreed to buy BitGo in May 2021, when crypto companies were expanding through acquisitions and public listings. In August 2022, Galaxy said it was terminating the deal because BitGo had failed to deliver audited 2021 financial statements by a July 31 deadline. BitGo sued soon after, and Reuters reported at the time that the claim stemmed from the collapse of what had been billed as a landmark crypto transaction.

Earlier this year, Bloomberg Law described the dispute as a fight over whether BitGo can claim a specific breakup payment rather than broader damages. That question has drawn deal lawyers back to the case because it goes to how Delaware courts treat missed closing conditions after a market reversal.

Novogratz told the court he had been “pushing to get this deal done,” according to Bloomberg’s account of the hearing. His testimony helps Galaxy argue that the case should turn on contractual compliance, not only on the drop in token prices and tighter financing conditions that hit crypto markets in 2022.

BitGo has said Galaxy’s withdrawal caused lasting damage after the company agreed to the acquisition. Mike Belshe, BitGo’s co-founder and chief executive, said the fallout was “incredibly damaging” in remarks carried by The Block.

The hearing does not resolve the lawsuit, and the companies are still contesting whether BitGo missed the July 31, 2022 deadline for audited statements in a way that allowed Galaxy to terminate. What Delaware decides later will shape whether the dispute is treated as a missed-closing-conditions case or as a buyer retreat during a market break.

Why the case still matters

If BitGo wins meaningful recovery, dealmakers are likely to read the ruling as confirmation that crypto merger terms can be enforced much as they are in conventional finance, even when the market turns quickly. Galaxy’s preferred outcome is narrower: a ruling that shows courts will read closing conditions strictly when a seller misses a technical obligation.

The case is unfolding as large crypto firms again court institutional clients, regulators and counterparties after the failures of the last cycle. A public fight over a failed 2022 merger is a reminder that some of that period’s liabilities did not disappear with the rebound in token prices. They moved into court filings instead.