An Entire Galaxy of Problems

The cryptocurrency-based financial services firm, Galaxy Digital, has abandoned plans to buy crypto custody firm BitGo for $1.2 billion. 

• The purchase was initially announced in May 2021, and expected to be closed by the end of the year for what, at the time, was approximately $1.2 billion in stocks and cash, according to CoinDesk.
• BitGo had been required to provide audited financial statements by the end of July, which the firm failed to deliver.
• The deal was delayed in March as Galaxy Digital awaited approval from the U.S. Securities and Exchange Commission for its plan to reorganise as a Delaware-based company.
• At the same time, the original contract terms were tweaked to account for a decline in the price of Galaxy’s Toronto-listed shares, giving BitGo investors a 12%, rather than the initial 10%, stake in the merged company.
• Last week, Galaxy Digital reported a second-quarter net loss of $554.7 million, more than triple the $182.9 million loss from the same period in the previous year.  The loss was mainly a result of the crypto market downturn and poor investments in Galaxy’s trading business.

As of June 30th, Galaxy Digital has a liquidity position of $1.5 billion and has reported second-quarter preliminary assets under management at nearly $1.7 billion.