Galaxy Digital Holdings abandoned its $1.2B acquisition of crypto custody firm BitGo for not providing audited financial statements within the deadline.
Cryptocurrency-focused financial services and investment management firm Galaxy Digital Holdings, run by noted investor Michael Novogratz, revealed that it had scrapped its deal of $1.2B acquisition of crypto custody firm BitGo. The reason behind terminating the acquisition agreement is BitGo’s failure to deliver audited financial statements for 2021 that comply with the requirements of the contract by July 31. As such, Galaxy Digital is not liable to pay any termination fees regarding the deal.
BitGo Fails To Deliver Galaxy Digital The Requested Financial Statements
Back in May 2021, Galaxy Digital announced the acquisition of BitGo. It established a road for Galaxy to become a one-stop shop for institutions, accelerating the firm’s mission to institutionalize digital asset ecosystems and blockchain technology. However, after making efforts for more than a year to acquire the digital asset custodian BitGo, Mike Novogratz’s cryptocurrency investment firm Galaxy Digital has decided to terminate the acquisition.
CEO and Founder of Galaxy Mike Novogratz said, “Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”
According to Galaxy Digital, no termination fee is payable in connection with the decision.
Key Benefits Of The Terminated Deal
When Galaxy Digital first revealed its intention to acquire BitGo in May 2021, the deal was valued at roughly $1.2 billion in cash and stock transactions. The proposed acquisition included Galaxy Digital’s 33.8 million new shares and a $265 million cash component, and it was supposed to be the crypto sector’s first $1 billion deal.
Galaxy planned to become a Delaware-based company and list the company publicly on the Nasdaq after the acquisition as it was positioned to help Galaxy Digital expand its offerings for institutional investors by adding services such as investment banking, tax services and prime lending. BitGo would also bring numerous fresh additions to Galaxy’s existing business infrastructure, including a controlled client custody service offered by BitGo Trust Companies. The custody firm would have also reinforced Galaxy Digital with more than 400 new global clients.
Galaxy Digital Remains Focused Amid Q2 Loss
Last week, Galaxy Digital reported an overall loss of $554.7 million in the second quarter, up from a loss of $183 million a year ago. The firm is pointing out a market downturn that has seen the market cap of cryptocurrencies plunge to $1.1 trillion from $2.8 trillion in 10 months.
Novogratz said, “We’re evaluating what’s best for both businesses. It’s been frustrating that it’s taken as long as it has.” The firm is looking for the SEC’s review and stock exchange approval for a Nasdaq listing.
Galaxy Digital remains focused on executing its business goals and driving long-term performance for investors. Galaxy rolled-out its plans to launch new products, including its upcoming offering, Galaxy One Prime. Targeting institutional investors, Galaxy One Prime will integrate services like trading, lending and derivatives alongside leverage proprietary in-house technology, as well as a multi-faced custodial architecture that integrates qualified blue-chip custodians for broad asset support and tailored account types.
