Bitgo sues Galaxy Digital in Delaware, seeks $100M

Bitgo filed a lawsuit in Delaware Chancery Court asking the court to enforce at least the $100 million reverse breakup fee and to pursue additional damages tied to a collapsed May 2021 merger valued at $1.2 billion.

Under the May 2021 agreement, Galaxy Digital had agreed to acquire Bitgo, a crypto custody and security firm. Galaxy terminated the deal in August 2022, saying Bitgo did not deliver audited 2021 financial statements in the contractual form required. Bitgo maintains it met the documentation requirements and says Galaxy’s termination caused direct harm.

Testimony this week included remarks from Bitgo CEO Mike Belshe and Galaxy founder Mike Novogratz. Belshe testified that Bitgo provided the necessary financial information and described the impact as severe: “This was incredibly damaging.” Bitgo is pressing for at least the $100 million reverse breakup fee in the merger agreement and asserts actual damages could be higher.

Bitgo alleges Galaxy failed to use reasonable efforts to complete the transaction and withheld material details of government inquiries that could have affected regulatory approvals, including potential concerns involving the U.S. Securities and Exchange Commission. Bitgo contends Galaxy abandoned the agreement after market conditions worsened and the deal’s economics changed.

Novogratz testified that U.S. regulatory probes did not target Galaxy and did not affect the merger’s regulatory approval path. He also testified that Galaxy realized nearly $400 million from sales of Terra Luna tokens and described those sales as intended to reduce risk.

Procedural history includes Bitgo’s 2022 suit, a June 2023 dismissal by Vice Chancellor J. Travis Laster finding Galaxy had a valid termination right, and a May 2024 reversal by the Delaware Supreme Court. The high court found the merger agreement’s definition of “financial statements” was ambiguous and remanded the case to the Chancery Court.

The current trial is before Chancellor Kathaleen St. Jude McCormick. The judge, not a jury, will decide whether Galaxy met contractual obligations, whether Bitgo’s financial statements satisfied the agreement, and whether Galaxy had a duty to disclose regulatory inquiries. Possible outcomes include enforcement of the $100 million fee, a larger damages award, a settlement, or a ruling for Galaxy.

Despite the litigation, the companies have continued limited collaboration on other initiatives, including staking. No final ruling had been issued as of May 23, 2026. The case is filed as C.A. No. 2022-0808 in the Delaware Chancery Court.