The crypto sector’s first $1 billion deal, heralded by a sharp rise in token prices, is collapsing as the market reverses massive gains.
Galaxy Digital has called off its $1.2 billion acquisition of crypto guardian Bitgo, which it announced in May last year, after the San Francisco-based startup failed to provide audited financial statements for 2021.
BitGo’s failure to file its financial statements by July 31 is a breach of terms the two companies agreed to last year, Galaxy Digital said in a public statement that the termination of the deal would not pay the company any fees. Toronto-traded Galaxy Digital’s stock jumped on the news.
The proposed acquisition – Galaxy Digital was supposed to be the crypto sector’s first $1 billion deal, which was planned to include 33.8 million new shares and a cash account of $265 million. The acquisition of BitGo is positioned to help Galaxy Digital expand its offerings to institutional investors by adding services such as investment banking, principal lending and tax services. BitGo counts Galaxy Digital, Goldman Sachs, Valor Equity Partners, Kraft Ventures, DRW and Redpoint Ventures among its backers.
“The technology, solutions and people power we will have as a result of this acquisition will unlock unique value for our customers and drive long-term growth for our combined businesses. We are excited to welcome Mike Belsche and the talented BitGo team to Galaxy Digital,” said Mike, CEO and Founder of Galaxy Digital. Novogratz said at the time.
Novogratz (pictured above) said Monday: “Galaxy remains positioned to capitalize on strategic opportunities for success and sustainable growth.” We are committed to continuing our process to list in the US and providing our clients with the leading solution that makes Galaxy a one-stop shop for institutions.
The announcement comes after Galaxy Digital posted a second-quarter loss of $554.7 million earlier this month, down from a loss of $183 million a year ago. On the company’s earnings call, Novogratz said Galaxy Digital has about $1 billion in cash on hand.
Galaxy Digital said today it is awaiting SEC review and stock exchange approval for a Nasdaq listing.