Galaxy Digital founder and CEO Mike Novogratz testified in Delaware Chancery Court this week as the legal battle over the collapsed $1.2 billion acquisition of BitGo intensifies. BitGo is seeking at least $100 million in damages or a termination fee from Galaxy after the deal was abruptly canceled in August 2022.
The merger, originally announced in May 2021 when crypto valuations were sky-high, was set to be the biggest ever in the industry at the time. Under the terms, BitGo’s CEO Mike Belshe would have joined Galaxy as deputy CEO and a board member. However, Galaxy walked away, citing BitGo’s failure to deliver audited financial statements compliant with the merger agreement by the July 31, 2022 deadline.
The dispute now hinges on SEC Staff Accounting Bulletin 121, which came into effect shortly before the deadline and imposed new guidance for public companies safeguarding digital assets. According to Bloomberg, Novogratz said he was “pushing to get this deal done,” but the SEC’s tough stance under then-Chair Gary Gensler complicated approval. He also stated Galaxy itself was not the subject of a government probe.
BitGo accuses Galaxy of acting in bad faith, alleging the firm hid details of U.S. regulatory inquiries that could have affected the merger. CEO Mike Belshe testified the failed deal was “incredibly damaging” to BitGo’s reputation, arguing that Galaxy’s public reasoning implied BitGo could not pass an audit. Galaxy maintains it validly terminated the agreement and owes no reverse fee, pointing to BitGo’s non-compliant financial statements.
The court showdown unfolds as both firms expand. BitGo went public in January 2026 and reported $3.77 billion in Q1 revenue, though its net loss widened to $60.7 million. Galaxy recently secured a BitLicense and Money Transmission License in New York, allowing it to offer trading and custody services to institutions. The trial is expected to conclude this week, with the judge deciding whether Galaxy must pay the $100 million.
