Today Galaxy Digital announced the termination of a $1.2 billion deal to buy digital asset custodian BitGo that was first announced in May 2021. The stated reason was BitGo’s failure to deliver audited financial statements for 2021 by July 31, which Galaxy claims is termination grounds without any penalty. Last week Galaxy announced a quarterly loss of $554.7 million but has a liquidity position of $1.5 billion.
In the original deal, Galaxy was to pay $265 million in cash and 33.8 million shares, with Galaxy’s stock price around $27 at the time. At the end of March this year, the terms were revised so that Galaxy would pay the same in cash but 44.8 million in stock. The stock price was US$16 shortly after the revision but closed at $6.74 on Friday.
Canada-based Galaxy has been planning to relocate to Delaware and list on Nasdaq, reiterating that intention today.
“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner,” said Mike Novogratz, CEO and Founder of Galaxy. “We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”
Soon it intends to launch Galaxy One Prime, an institutional solution covering trading, lending, derivatives and custody. Galaxy says the custody aspect involves integrating “qualified blue-chip custodians.”
We contacted BitGo for comment but didn’t receive a response in time for publication. The company is regulated as a Trust company in South Dakota.
With increasing institutional adoption, custody has been a hot area. PayPal bought Curv in March last year, and crypto lender Celsius bought GK8 in November. Given Celsius is going through Chapter 11 bankruptcy, the company is up for sale. More recently, Circle acquired CYBRAVO.
Prior to the crypto crash, two of the biggest digital asset custody technology firms raised massive funding rounds. Fireblocks has raised more than $1 billion in venture funding, and Anchorage Digital is just short of half of that, with its last $350 million round in December led by KKR.