Galaxy Digital, BitGo Clash in Court Over $100 Million Failed Deal

A high-stakes trial between Galaxy Digital and BitGo over a $100 million claim commenced last week, according to Bloomberg. The lawsuit stems from Galaxy's May 2022 decision to abandon its planned $1.2 billion acquisition of the institutional custody platform. Galaxy alleges BitGo failed to deliver audited financial statements for 2021, a condition of the deal. The legal battle underscores persistent consolidation pressures and due diligence challenges within the digital asset sector.

Context — why this failed crypto merger matters now

The collapse of the Galaxy-BitGo deal in May 2022 occurred amid the onset of the "crypto winter," which saw the total market capitalization of digital assets fall from a $3 trillion peak to under $1 trillion. The last major failed crypto M&A of similar scale was the terminated $1.7 billion merger between Prime Trust and BitGo in 2015, which also involved custody assets. The current macro backdrop features a stabilizing crypto market, with the price of Bitcoin recovering above $80,000 in May 2026. What changed to trigger this court battle now is the conclusion of private arbitration and discovery phases, pushing the dispute into public litigation as both firms seek to allocate financial responsibility for the deal's failure.

Legal proceedings in the cryptocurrency industry have accelerated, moving from private negotiations to public courtrooms. The catalyst chain began with Galaxy's formal termination notice citing unmet conditions. BitGo's subsequent demand for the $100 million termination fee forced Galaxy to file a preemptive lawsuit in New York. The shift to a public trial allows market participants to scrutinize the internal financial controls and merger covenants that underpinned one of the sector's most significant proposed acquisitions.

Data — what the numbers show

Four concrete data points define the scope and financial stakes of the dispute. The original acquisition was valued at $1.2 billion, structured as a mix of cash and Galaxy stock. The specific termination fee in contention is $100 million. Galaxy Digital's market capitalization as of late May 2026 is approximately $4.8 billion, making the claim equivalent to about 2.1% of its total value.

BitGo reportedly custodies over $100 billion in assets for more than 1,500 institutional clients. The timeline shows a key date discrepancy: Galaxy announced the deal in May 2021 but terminated it exactly one year later in May 2022. A comparison of deal values reveals the failed acquisition was smaller than Coinbase's 2022 canceled plan to acquire FTX Europe for $1.5 billion but larger than most peer custody platform deals.

Metric	Galaxy-BitGo Deal (2021)	Industry Comparable (Prime Trust, 2015)
Stated Value	$1.2 billion	$1.7 billion
Outcome	Terminated, $100M fee dispute	Terminated, no public fee dispute
Core Business	Custody & Prime Brokerage	Custody & Payments

The dispute centers on a specific contractual performance metric. Galaxy claims BitGo failed to deliver audited 2021 financials by an agreed April 2022 deadline.

Analysis — what it means for markets / sectors / tickers

The trial's outcome has direct second-order effects for publicly traded digital asset firms. A ruling favoring BitGo and awarding the $100 million payment would represent a direct liability for Galaxy Digital (GLXY). This could pressure GLXY's stock, potentially creating a near-term downside of 3-5% as the market prices in the payout and associated legal costs. Conversely, a win for Galaxy would be a minor positive catalyst, reinforcing its financial position.

Private custody competitors like Anchorage Digital and Copper.co could benefit indirectly. Institutional clients may scrutinize the financial transparency and operational stability of their custody partners more closely following the trial's revelations. This could accelerate client migration toward platforms with demonstrably strong audit practices, potentially increasing their assets under custody by a mid-single-digit percentage over the next quarter. The sector for publicly-listed crypto equities, represented by indexes like the BITQ ETF, may see increased volatility as the case highlights sector-wide M&A execution risks.

A key limitation is that the trial may not fully reveal the strategic rationale behind Galaxy's withdrawal, which could have been influenced by broader market conditions beyond the audited statements. Current positioning shows legal analysts are closely watching the case, with trading flow data indicating no major directional bets on GLXY yet. The flow of institutional capital into crypto custody solutions remains strong, but due diligence periods are lengthening.

Outlook — what to watch next

The immediate catalyst is the ongoing trial in New York, with a verdict expected by late July 2026. Following the verdict, watch for either party to potentially file an appeal, which could extend final resolution into 2027. A secondary catalyst is Galaxy Digital's Q2 2026 earnings report, scheduled for early August, where management will certainly address the case's financial impact.

Key levels to monitor include Galaxy Digital's stock support around the $18.50 mark, a level it has defended throughout previous legal uncertainty. For the broader custody sector, watch the quarterly assets under custody reports from major private players. If the trial reveals widespread audit compliance issues, it could trigger a regulatory review. The outcome will set a precedent for M&A agreements across fintech, influencing how termination clauses and material adverse change conditions are drafted.

Frequently Asked Questions

What does the Galaxy vs. BitGo case mean for retail crypto investors?

The trial is primarily a contractual dispute between two institutional-facing companies. For retail investors, the main impact is through exposure to Galaxy Digital's stock (GLXY) if held directly or via a fund. The case highlights the importance of thorough due diligence in crypto mergers, a lesson applicable to evaluating any high-growth tech investment. Retail investors should monitor the verdict for its effect on GLXY's balance sheet but not expect direct implications for personal cryptocurrency holdings on retail exchanges.

How does this $100 million claim compare to other crypto legal settlements?

The $100 million claim is substantial but not unprecedented. In 2023, BlockFi reached a $943 million settlement with the U.S. Securities and Exchange Commission. The Galaxy-BitGo dispute is unique as it centers on alleged breach of a merger agreement rather than regulatory misconduct. Its magnitude is similar to the confidential settlement between Ripple Labs and a former partner in 2024, which was reportedly in the "nine-figure" range. The case tests standard M&A clauses in the novel context of crypto financial reporting.