The Delaware Supreme Court recently ruled in favor of BitGo by overturning a lower court’s dismissal of the company’s $100 million lawsuit against Galaxy Digital. The lawsuit resulted from a failed acquisition between the two entities, with the Supreme Court stating that the language used in the BitGo-Galaxy Digital $1.2 billion merger agreement was “ambiguous.” This ambiguity led to the court reversing the decision made by the Delaware Chancery Court and allowing for the consideration of additional evidence to resolve the ambiguity. This successful appeal now gives BitGo an opportunity to pursue legal action against Galaxy Digital, with the initial lawsuit filed in August 2022 accusing Galaxy of an intentional breach of the acquisition agreement.
In response to the recent decision by the Delaware Supreme Court, a spokesperson for Galaxy stated that the company would “continue to vigorously defend ourselves” and expressed confidence in the merits of their case. Galaxy, led by Mike Novogratz, had announced its intention to acquire BitGo in May 2021 as part of its public offering in the United States. However, in November 2022, Galaxy disclosed approximately $77 million in exposure to the cryptocurrency exchange FTX just before the exchange filed for bankruptcy. Galaxy Asset Management was subsequently appointed by the FTX estate to assist with the selling, staking, and hedging of its crypto holdings.
Despite facing a 4% decline in Galaxy Digital stock (GLXY) to $12.80 in after-hours trading, the shares have gained 23.5% since the beginning of the year. The majority of these gains followed the approval of spot Bitcoin ETFs in mid-January. However, the stock remains nearly 70% lower than its all-time high of $40 during the previous crypto market peak in November 2021. Steve Kurz, the Global Head of GAM at Galaxy Digital Holdings, expects top wirehouses to increase their involvement in spot Bitcoin ETFs within the next year. He mentioned during the Exchange ETF Conference in Miami Beach, Florida, that he would be surprised if the top 10 wirehouses are not involved in this, predicting institutional FOMO in the near future.
Galaxy Asset Management serves as the institutional investment division of Galaxy Digital Holdings, encompassing Global Markets and Digital Infrastructure Solutions. Steve Kurz leads the division, which was established in 2018. The company has seen significant growth potential in the cryptocurrency space, with Kurz expecting increased involvement from financial advisers and wirehouses in spot Bitcoin ETFs in the coming months. The recent developments surrounding the lawsuit between BitGo and Galaxy Digital highlight the complex and evolving nature of the cryptocurrency industry, with legal disputes and financial challenges shaping the trajectory of key players in the market.
