Galaxy Digital founder Mike Novogratz testified in Delaware Chancery Court this week in the ongoing legal battle over the failed $1.2 billion BitGo acquisition. BitGo is seeking at least $100 million in damages, claiming Galaxy failed to make reasonable efforts to complete the deal and concealed details of U.S. regulatory investigations. The case centers on whether Galaxy's termination of the transaction was justified under contractual terms tied to financial compliance requirements.
Origins of Crypto's Biggest Failed Merger
Galaxy announced the acquisition in May 2021, marking the largest proposed merger in the crypto industry at that time. Under the deal terms, BitGo CEO Mike Belshe would have joined Galaxy as deputy CEO and board member.
Galaxy terminated the deal in August 2022 as crypto markets reeled from the Terra ecosystem collapse. The company cited BitGo's failure to deliver compliant, audited financial statements by the July 31 deadline. The accounting dispute centers on SEC Staff Accounting Bulletin 121 (SAB 121), which introduced new requirements for public companies safeguarding digital assets.
Novogratz Testimony and Regulatory Claims
During his testimony, Novogratz stated: "The entire time, I was pushing to get this deal done." He argued that the SEC under then-Chair Gary Gensler made regulatory approval effectively impossible.
Novogratz also addressed Galaxy's involvement in Luna trading before the Terra collapse, stating: "The idea that I single-handedly created this lunacy is just not correct."
BitGo CEO Mike Belshe countered that his company had provided all required information and called the failed deal "incredibly damaging" to BitGo's reputation and business prospects.
The $100 Million Termination Fee at Stake
The case hinges on whether BitGo's financial statements complied with SAB 121 requirements by the contractual deadline. Galaxy contends that non-compliance gave it a valid exit without triggering the $100 million termination fee.
BitGo argues that Galaxy wrongfully abandoned the transaction. The Delaware Supreme Court previously noted that SAB 121 became effective shortly before BitGo's deadline, adding complexity to the compliance timeline.
Precedent for Crypto M&A Agreements
The trial is expected to conclude this week, with the judge issuing a final ruling on whether Galaxy owes the termination fee. The case has become one of the most closely watched contract disputes in crypto, with potential implications for how digital asset mergers handle regulatory contingencies.
What's Next
A ruling from the Delaware Chancery Court is expected in the coming weeks. The outcome could influence how future crypto M&A agreements structure regulatory approval conditions and termination provisions.
