Overview
- The trial in Delaware Chancery Court continued this week with testimony from Galaxy founder Mike Novogratz and BitGo CEO Mike Belshe as a judge prepares to rule on whether Galaxy lawfully ended the $1.2 billion merger.
- BitGo is seeking at least $100 million under a reverse break fee that it says Galaxy agreed to pay when the deal collapsed in August 2022 after Galaxy said BitGo missed a July 31 deadline for audited 2021 financials.
- The central legal question is whether BitGo’s filings met the contract’s financial‑statement standard in light of SEC Staff Accounting Bulletin 121, which changed guidance on how companies must treat safeguarded digital assets.
- The Delaware Supreme Court revived BitGo’s claim in May 2024 by finding the contract language ambiguous, sending the dispute back to trial to examine facts and parties’ conduct before termination.
- A ruling for BitGo would force Galaxy to pay a large sum and could make acquirers draft tighter audit and reporting clauses, while a ruling for Galaxy would signal that SAB 121‑related reporting can justify walkaways in crypto deals.