Galaxy Digital Reneges BitGo

What was at one point the largest crypto deal in history and the first to be more than $1 billion seems to now be over.

This week, Galaxy Digital (GLXY) announced that it has terminated its $1.2 billion acquisition offer of BitGo. The deal was first announced in May 2021 with Galaxy putting up $265 million in cash and the rest in 33.8 million newly issued shares. The acquisition would have given BitGo shareholders a 10% stake in Galaxy.

The deal was first expected to close Q4 2021, but in March of this year the terms were being renegotiated based on the progress BitGo had made as an independent company since the deal was originally announced. The deal was hyped (including in CoinSnacks) up as a great catalyst for GLXY holders as it gave the company access to institutional investors by adding services such as investment banking, prime lending, and tax services. For context, at of the end of 2021, BitGo had more than $64 billion in assets under custody.

Now, in a stunning turn of events, the deal is off.

Galaxy states that they have ended the deal because BitGo failed to deliver audited financial statements for 2021 by a July 31 deadline. BitGo claims that the termination is “improper” and that it will seek a $100 million termination fee.

The Hits Just Keep Coming For Galaxy

Like most public crypto companies, GLXY’s stock price has taken a beating ever since the market dropped. Tie that to this week’s news and too much exposure to Terra/Luna prior to its collapse (not to mention this regrettable ink on their CEO’s arm), and it’s fair to say that Galaxy Digital has seen better days.

Making things worse is the company’s latest earnings release, where it reported a massive $555 million quarterly loss.

What’s Next?

All things considered, a rough quarter doesn’t necessarily spell doom and gloom for Galaxy Digital going forward. The company, known as a “one-stop shop” for onboarding institutions, still has much to look forward to.

Despite backing out on the BitGo merger, it appears that the management team already has an alternative plan in place with the development of Galaxy One Prime, a new product for institutional investors that will “integrate trading, lending, and derivatives alongside access to qualified custody all through a unified tech platform.”

While this may save the company a lot of money, both companies are coming out of this situation a bit battered and most likely worn out after more than a year of trying to close the deal.

Here at CoinSnacks, we also wouldn’t be surprised if the deal re-emerges with a much lower price tag for BitGo considering that valuations have been nearly cut in half since the market correction.

Either way, it hasn’t been a great year for Michael Novogratz’s Galaxy Digital. With BitGo now likely in its rearview mirror, Galaxy’s long-anticipated Nasdaq uplisting is seemingly the only catalyst to look forward to for the time being.