The crypto sector’s first $1 billion deal, announced at the top of a record spike in token prices, is falling apart as the market reverses much of the gains.
Galaxy Digital said on Monday it has called off its proposed $1.2 billion acquisition of crypto custodian BitGo, a landmark deal it announced last May after the San Francisco-based startup failed to provide its audited financial statements for 2021
BitGo’s alleged failure to provide financial statements by July 31 violated terms the two firms had agreed upon last year, Galaxy Digital said in a public statement, adding that the termination of the deal will not impose a fee on the company. Shares of Galaxy Digital, which trades in Toronto, jumped on the news.
The proposed acquisition – which was proposed to involve Galaxy Digital issuing 33.8 million new shares and a $265 million cash component – was supposed to be the crypto sector’s first $1 billion deal. The purchase of BitGo was intended to help Galaxy Digital expand its offerings for institutional investors by adding services such as investment banking, prime lending and tax services. BitGo counts Galaxy Digital, Goldman Sachs, Valor Equity Partners, Craft Ventures, DRW and Redpoint Ventures among its backers.
“The strength of technology, solutions and people we will have as a result of this acquisition will unlock unique value for our customers and drive the long-term growth of our combined business.” We are thrilled to welcome Mike Belshi and the talented BitGo team to Galaxy Digital,” Mike Novogratz, CEO and founder of Galaxy Digital, said at the time.
Novogratz (pictured above) said on Monday: “Galaxy remains positioned to succeed and take advantage of strategic growth opportunities in a sustainable manner. We are committed to continuing our US listing process and providing our clients with a first-class solution that truly makes Galaxy a one-stop shop for institutions.”
The announcement follows Galaxy Digital reporting a second-quarter loss of $554.7 million, down from a loss of $183 million a year ago, earlier this month. On the company’s earnings call, Novogratz said Galaxy Digital has about $1 billion in cash.
Galaxy Digital said today that it is awaiting SEC review and Nasdaq exchange approval for a listing.