Galaxy Digital Walks From Billion Dollar Purchase Of BitGo Over Financial Statements

A major transaction in the crypto space has been called off as a result of audited financial statements not being presented. Galaxy Digital (TSX: GLXY) this morning indicated that it will no longer be proceeding with acquiring BitGo, a crypto custodian, following the firms inability to provide audited financial statements by the deadline of July 31.

Galaxy initially announced the acquisition of BitGo back in May 2021, at the time referring to the transaction as a means of Galaxy becoming a “a one-stop-shop for institutions,” that “significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology.”

The transaction was set to see BitGo shareholders effectively own 10% of the company on a post-closing basis, with 33.8 million shares to be issued in addition to a cash payment of $265 million. As part of the transaction, BitGo CEO Mike Belshe was to also become deputy CEO of Galaxy.

Then in March 2022, the terms of the deal were modified slightly. Galaxy was to still pay $265 million in cash, but shares to be issued climbed to 44.8 million, resulting in a total transaction value of $1.16 billion at the time. Post-closing, BitGo was to own 12% of the company, an increase from 10%. The transaction was expected to close sometime between the second and fourth quarter of this year, subject to Galaxy becoming a Delaware-based company, subject to SEC review.

With the transaction now cancelled due to BitGo’s failure to produce the required documentation, Galaxy has stated that it is still committed to redomiciling the company, which will allow it to list on the Nasdaq.

“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. 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,” commented CEO Mike Novogratz.

In place of BitGo and its institutional clients, which at the time of announcement were said to number in excess of 400, the company now intends to roll out Galaxy One Prime, which will enable institutions to trade, lend, and utilize derivatives through one platform.

The news follows the release of Galaxy’s financial results last week, which saw the company report a comprehensive loss of US$554.7 million.

Galaxy Digital last traded at $8.59 on the TSX.

Information for this briefing was found via Sedar and Galaxy Digital. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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