Galaxy Digital pulled out of the $1.2B merger because it could not afford it, says BitGo

BitGo said that Galaxy Digital’s decision to pull out of the merger deal has nothing to do with its financial statements but with Galaxy’s inability to finance the deal owing to its loss of over $661 million in the first half of 2022.

On August 15, Galaxy Digital announced that it would terminate its merger agreement with BitGo, claiming that the latter failed to deliver its audited financial statement in the accepted accounting standard.

BitGo, in a motion filed on Sept. 15, said it had complied with the merger agreement and delivered a comprehensive financial statement prepared using the generally accepted accounting standards (GAAS).

BitGo added:

“BitGo had timely delivered all its audited financial statements under the merger agreement — financial statements with clean opinions audited by highly regarded independent accounting firms,”

According to BitGo, GAAS is the appropriate standard for private companies, as such, Galaxy Digital’s claim for a public company standard was “immaterial.” It added that Galaxy Digital had earlier accepted the financial statement and submitted it to the SEC at the time of initiating the merger deal.

BitGo said that the blame game played by Galaxy was a subtle way to cover for its lack of finance to complete the $1.2 billion merger deal. Galaxy Digital reportedly lost over $111 million in Q1 and another $550 million in Q2 of 2022.

With the recent development, BitGo has asked the court to hold Galaxy responsible for intentionally cooking up the story. BitGo is seeking a payment of $100 million to cover damages caused by the termination.

Galaxy Digital evading $100 million fee

Back in March 2022, Galaxy Digital reportedly promised BitGo a termination fee of $100 million to be able to extend the merger agreement.

BitGo obliged to the extension, only for Galaxy Digital to terminate the deal in August. Galaxy Digital is said to be evading the fee by blaming the termination on BitGo.