Regulation
BitGo Granted Appeal in $100M Lawsuit Against Galaxy Digital
The Delaware Supreme Court has reversed a previous decision that had thrown out BitGo’s $100 million lawsuit against Galaxy Digital.
The decision will allow BitGo to proceed with its case, challenging the termination of a $1.2 billion merger agreement by Galaxy Digital.
BitGo Granted Appeal in Lawsuit Against Galaxy Digital
In a filing dated May 22, the Delaware Supreme Court affirmed that the language in the merger agreement between BitGo and Galaxy Digital was “ambiguous.” Since the language is ambiguous, it is necessary to turn to extrinsic evidence to analyze the conflict.
This ruling, consequently, overturns the June 2023 ruling by the Delaware Court of Chancery that dismissed BitGo’s lawsuit, which had argued that Galaxy had a ‘clean termination right’ because BitGo had not provided audited financial statements for 2021 on time.
R. Brian Timmons, a lawyer from Quinn Emanuel, the law firm that represents BitGo, said that he is satisfied with the Supreme Court ruling and added,
“We believe justice was done on appeal, and we are glad to proceed with this case in Chancery Court. ”
Background of the Legal Dispute
BitGo sued Galaxy Digital back in August of 2022, accusing the company of an “intentional breach” of a merger agreement between the two firms. The lawsuit arose after Galaxy had declared that it was withdrawing a $1. 2 billion acquisition deal, claiming that BitGo had not submitted the required audited financial statements on time.
This acquisition was declared by Galaxy’s CEO, Mike Novogratz, in May 2021. However, by August 2022, Galaxy argued that it was justified in terminating the contract with BitGo because of its failure to meet the agreement’s terms. The main cause of the dispute was the controversy surrounding the meaning of the term “financial statements”.
Implications of the Supreme Court Decision
By ruling in favor of the motion to reverse the decision made by the lower court, the Delaware Supreme Court enables BitGo to proceed with its lawsuit against Galaxy Digital. The court of appeal held that both the parties had some basis for their respective beliefs as to what constituted acceptable financial documentation under the merger agreement.
This, as a result, means that in order to ascertain the correct answer to the problem, more analysis of extrinsic evidence is required.
The legal team representing BitGo is confident about the forthcoming proceedings in the Chancery Court. The decision is significant as a turning point in this ongoing legal battle, offering BitGo another chance to sue for the broken merger deal.
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