The Delaware Supreme Court has breathed new life into BitGo’s $100 million lawsuit against Galaxy Digital. In a decisive move, the court reversed an earlier decision that had dismissed BitGo’s claims, allowing the case to proceed and challenging the termination of a substantial $1.2 billion merger agreement between the two companies.
On May 22, the Delaware Supreme Court ruled that the language within the merger agreement between BitGo and Galaxy Digital was “ambiguous.” This ambiguity necessitates the consideration of extrinsic evidence to resolve the dispute.
The court’s decision overturned the June 2023 ruling by the Delaware Court of Chancery, which had dismissed BitGo’s lawsuit on the grounds that Galaxy had a ‘clean termination right.’ Galaxy Digital had previously argued that BitGo failed to provide audited financial statements for 2021 in a timely manner, justifying their termination of the merger.
In June 2023, the Delaware Court of Chancery sided with Galaxy Digital, largely dismissing BitGo’s case. The dismissal came after Galaxy Digital abandoned its acquisition plans for BitGo in August 2022, citing a breach of contract. Galaxy Digital argued that BitGo’s delay in delivering audited financial statements constituted a significant breach, providing grounds for terminating the $1.2 billion deal. BitGo responded by filing a lawsuit seeking $100 million in damages, contesting Galaxy Digital’s termination right and claiming that the abandonment was unjustified.
According to familiar sources, R. Brian Timmons, a lawyer from Quinn Emanuel, the law firm representing BitGo, expressed satisfaction with the Supreme Court’s ruling. Timmons highlighted that the recognition of ambiguity in the merger agreement is a crucial development, as it opens the door for BitGo to present additional evidence supporting their case. The Supreme Court’s decision underscores the necessity of examining the context and extrinsic factors surrounding the agreement, rather than relying solely on its written terms.
The Supreme Court’s decision marks a significant turn in the ongoing legal battle between BitGo and Galaxy Digital. By acknowledging the ambiguous nature of the merger agreement, the court has allowed BitGo to move forward with its lawsuit, potentially reshaping the dynamics of how such agreements are interpreted and enforced in the future. This case could set a precedent for how ambiguities in merger agreements are handled, emphasizing the importance of clear and precise language in contract drafting.
With the Supreme Court’s ruling, the case will now return to the Delaware Court of Chancery for further proceedings. Both parties will have the opportunity to present extrinsic evidence to support their interpretations of the merger agreement. The outcome of this case could have significant financial implications for both BitGo and Galaxy Digital, as well as broader repercussions for the cryptocurrency and digital asset industry.
