Novogratz vs. BitGo CEO: Head-on Collision in Court Over $100 Million

▲ USA, lawsuit/AI generated image

As an unprecedented large merger deal in the virtual asset market headed towards collapse, industry giants engaged in a fierce legal battle over $100 million in termination fees.

Cryptocurrency specialized media Cointelegraph reported on May 22 (local time) that Galaxy Digital founder Mike Novogratz clashed head-on with BitGo CEO Mike Belshe, appearing in a trial held at the Delaware Chancery Court concerning the failed $1.2 billion merger pushed in 2021. This M&A was the largest in virtual asset history at the time, garnering attention as an alliance that would create a super-large complex enterprise encompassing the entire virtual asset sector during a period when investor interest was at its peak. However, as the virtual asset market reeled from the collapse of the Terra ecosystem, Galaxy Digital declared the termination of the contract in August 2022. In response, Belshe demanded a $100 million termination fee, claiming that Galaxy Digital broke the contract while concealing the fact of an investigation by US authorities, while Galaxy Digital has fiercely countered, stating that it occurred because BitGo failed to provide financial information on time.

Novogratz, who took the stand on Tuesday, explained that he too "pushed to make the deal happen." However, he revealed that the U.S. Securities and Exchange Commission (SEC), then led by Gary Gensler, made the process "extremely difficult," making it clear that it was impossible for both companies to obtain regulatory approval. Novogratz further assailed, stating that the investigation had no bearing on the merger, and rather, BitGo itself forfeited its right to claim the $100 million termination fee by failing to submit essential financial statements by the deadline.

On the other hand, Belshe, who testified earlier on Monday, directly refuted, claiming that BitGo had provided all necessary information. Belshe explained that the deadline for submitting financial statements to meet the termination fee conditions was merely complicated by the U.S. SEC's accounting rules, which mandated that customer virtual asset holdings be recorded as liabilities. Belshe then expressed his outrage, stating that "Galaxy Digital's unilateral claims misled the world into believing that BitGo was a company incapable of passing an audit," and thus "caused immense damage" to BitGo's corporate credibility. The trial is expected to conclude this week, with the Delaware Chancery Court judge making the final decision on whether the $100 million termination fee will be paid.

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