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.
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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.
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