One of the biggest custodians in the crypto industry BitGo has sued Galaxy Digital after it terminated its merger agreement with the firm.
The firm shared details of the lawsuit against Mike Novogratz’s cryptocurrency investment firm Galaxy Digital on its Twitter page.
According to the tweet, BitGo filed the lawsuit with Delaware Chancery Court. The firm added that the court document would become public on Thursday evening.
The digital asset custodian is seeking $100 million in damages from Galaxy Digital for abandoning its earlier merger agreement. It accused it of “improper repudiation” and “intentional breach”.
Why Galaxy Digital backtracked on the merger deal
Earlier in August, the investment firm terminated its planned acquisition of BitGo for $1.2 billion in stocks and cash.
According to Galaxy Digital, it abandoned the merger agreement due to BitGo’s inability to deliver its audited financial statement for 2021 by July 31 as part of the acquisition agreement for its SEC filing. It said at the time that no termination fee is payable in the case.
On the contrary, BitGo’s counsel claims it honored its end of the deal including providing the said financial statement.
As part of its plans to get listed on NASDAQ, Galaxy Digital had indicated interest to acquire BitGo in May 2021. The deal was expected to be completed between Q2 and Q4 of 2022.
Although Mike Novogratz assured investors that the firm is healthy, it is unclear if the recent market downturn played a part in the failed merger.
Galaxy Digital, a big Bitcoin(BTC) holder suffered heavy losses due to the decline in the price of the digital asset.
Several crypto firms including Bitpanda, CoinBase, and OpenSea amongst others have had to take measures that include reducing headcount and cutting operational costs to remain operational.
While Galaxy Digital has abandoned the merger agreement, it is still working on plans to go public in the US.
BitGo had earlier contracted legal firm Quinn Emanuel to pursue legal action against Galaxy Digital after it abandoned the deal and refused to pay a $100 million reverse break fee it promised in march 2022.
Galaxy Digital says BitGo’s claims are without merit and it would contest the claims in court.