Mike Novogratz Faces BitGo CEO in Court Over Failed $1.2B Crypto Merger
Quick Look
- Galaxy Digital founder Mike Novogratz testified in Delaware court against BitGo CEO Mike Belshe over a failed $1.2 billion crypto merger.
- Galaxy seeks to avoid a $100 million fee, citing regulatory hurdles and BitGo's alleged failure to provide financial information.
AI-generated summary
Why It Matters
Galaxy Digital and BitGo were involved in a proposed $1.2 billion merger in 2021, which Galaxy called off in August 2022. BitGo is seeking a $100 million termination fee, while Galaxy claims BitGo failed to provide necessary financial information and that regulatory approval was unlikely.
Galaxy Digital founder Mike Novogratz appeared in court on Tuesday to face off against BitGo CEO Mike Belshe in a long-running legal fight over a failed proposed $1.2 billion merger in 2021.
The planned deal was the largest-ever crypto merger at the time, set to create a massive conglomerate offering a suite of services at a time when investor interest in crypto was high.
Galaxy called off the deal in August 2022 as the crypto market was reeling from the collapse of the Terra ecosystem. BitGo has asked Galaxy to pay a $100 million fee for pulling out of the deal and also hid it was being probed by US authorities, while Galaxy has claimed BitGo failed to provide financial information on time.
According to Bloomberg, Novogratz testified in Delaware Chancery Court on Tuesday that he was “pushing to get this deal done,” but Galaxy and BitGo realized regulatory approval for the merger was unlikely because the Securities and Exchange Commission, then headed by Gary Gensler, made it “very difficult.”
Mike Novogratz, pictured in 2018 at a conference in Hong Kong, has appeared in court over a failed merger with BitGo. Source: RISE
He also said Galaxy was not the subject of the probe and it would not have affected the merger, while BitGo did not provide the needed financial information in time, forfeiting its right to a $100 million termination fee.
Related: On-Chain, In Court: What happened in crypto legal news this week
BitGo bargained for the termination fee, including a deadline to hand over financial statements, but that was complicated by the SEC’s accounting rules requiring companies to record customer crypto holdings as liabilities.
“This was incredibly damaging,” Belshe testified on Monday, claiming that BitGo had provided all the needed information. “Galaxy is telling the world we can’t pass an audit.”
The trial is set to end this week, and a judge will decide whether BitGo should receive the $100 million fee.
What to Watch
AI outlook — possibilities, not facts
A judge will rule on whether BitGo receives the $100 million termination fee.
Very likely · Within days
Open Questions
- Will the judge rule in favor of BitGo for the $100 million fee?
- What were the specific accounting rules from the SEC that complicated the deal?
- What were the exact financial details BitGo allegedly failed to provide?
- What is the current status of the SEC probe into BitGo?
