BitGo is pursuing at least $100 million in damages from Galaxy Digital after the collapse of what would have been one of the largest acquisitions in the crypto custody space. The deal, originally valued at $1.2 billion, was announced in May 2021 with considerable fanfare. It died roughly 15 months later, and now both companies are locked in a legal fight that has already bounced through multiple courts.

Here’s the thing: while these two firms are actively suing each other, they also announced a staking partnership in February 2025. Corporate relationships in crypto are, if nothing else, complicated.

How a billion-dollar deal fell apart

Galaxy Digital and BitGo revealed the proposed acquisition on May 5, 2021. At the time, the deal looked like a logical consolidation play, combining Galaxy’s trading and investment management operations with BitGo’s institutional-grade custody platform.

Then came the crypto winter.

Galaxy terminated the merger agreement on August 15, 2022, citing BitGo’s failure to deliver compliant audited financial statements for 2021 by a July 31 deadline. In Galaxy’s telling, this was a clear breach of the deal’s conditions. BitGo, predictably, disagreed.

BitGo fired back almost immediately, filing a lawsuit in Delaware Chancery Court alleging that Galaxy’s termination was improper and made in bad faith. The core of the claim centers on a $100 million reverse break fee that BitGo says Galaxy committed to paying if the deal fell through under certain conditions. BitGo argues those conditions were met.

The timing raised eyebrows across the industry. By mid-2022, crypto markets were in freefall. Bitcoin had dropped from its November 2021 highs, dragging the entire sector down with it. Galaxy itself reported significant financial losses during this period. Critics questioned whether the audit issue was a legitimate reason to terminate, or a convenient exit ramp from a deal that no longer made financial sense in a deteriorating market.

A legal rollercoaster through Delaware courts

The lawsuit’s journey through the legal system has been anything but straightforward.

A Delaware court initially dismissed BitGo’s claims in June 2023, which looked like a decisive win for Galaxy. The ruling appeared to validate Galaxy’s position that BitGo had failed to meet the contractual requirements for audited financials, rendering the termination legitimate.

But BitGo appealed, and the Delaware Supreme Court revived the case in May 2024. The higher court found that the definition of the required financial statements was ambiguous enough to warrant further examination. In English: the contract language wasn’t as airtight as Galaxy argued, and a judge needs to actually evaluate what both sides meant when they agreed to the deal terms.

That revival was a significant development. It means the $100 million reverse break fee claim remains very much alive, and Galaxy can’t simply walk away from the litigation without either settling or winning at trial.

The case now continues in Delaware, with both companies presumably running up legal bills that would make even crypto whales wince.

Both companies moved on, sort of

What makes this situation especially unusual is how the two firms have managed their relationship outside the courtroom.

In February 2025, Galaxy and BitGo announced a staking collaboration designed to provide institutional clients with staking services and collateral options. The partnership suggests that whatever animosity exists in litigation hasn’t entirely poisoned the commercial relationship. Or, more cynically, that money talks louder than lawsuits.

BitGo, for its part, hasn’t exactly been sitting around waiting for a settlement check. The company raised $100 million in a Series C funding round in 2023, demonstrating that institutional investors still see value in its custody and security infrastructure regardless of the Galaxy saga. That fundraise effectively matches the amount BitGo is suing Galaxy for, a coincidence that probably isn’t lost on either side’s legal teams.

Galaxy Digital, meanwhile, has been navigating its own strategic evolution. The company has continued to build out its trading and asset management businesses, though the financial pressures of the 2022 downturn left marks that took time to recover from.

What this means for investors

Look, this isn’t just a corporate spat between two companies. The case has broader implications for how crypto mergers and acquisitions are structured and enforced.

The Delaware Supreme Court’s decision to revive the lawsuit on the basis of contractual ambiguity sends a clear signal: reverse break fees in crypto M&A are enforceable, and acquirers can’t easily escape them by pointing to technicalities in financial reporting deadlines. For any firm considering a major acquisition in the digital asset space, the BitGo-Galaxy dispute is now required reading for deal lawyers.

The $100 million at stake is material for both companies. For Galaxy, a loss at trial or a large settlement would represent a meaningful financial hit on top of the losses already absorbed during the bear market. For BitGo, a win would validate its aggressive legal posture and add a significant windfall to a balance sheet already bolstered by its Series C.

Institutional investors watching this space should pay attention to how the case resolves. A ruling that broadly interprets reverse break fee provisions could make acquirers more cautious about deal structures, potentially slowing the pace of crypto M&A. Conversely, a Galaxy victory might embolden buyers to include tighter escape hatches in future agreements.

The fact that both companies are still willing to do business together while litigating suggests a pragmatic approach that could become more common in an industry where the pool of institutional-grade counterparties remains relatively small. When there are only so many players capable of handling institutional custody, staking, and trading at scale, burning bridges entirely isn’t always an option, even when $100 million is on the line.