Galaxy Digital, one of the biggest investment managers in the crypto market, is to press on with a planned listing on Nasdaq even as it called off plans to buy crypto custody platform BitGo for $1.2bn.
The Canadian-listed group said on Monday it was pulling out of the cash and shares deal, citing BitGo’s failure to provide audited financial statements for the year to December 2021.
The deal’s failure is a blow to Galaxy, which had hoped to interest more fund managers in the benefits of digital assets and blockchain technology with the deal for BitGo, which specialises in securely holding crypto investors’ assets.
The value of crypto assets has also tumbled in the intervening period, with the price of tokens such as bitcoin down by two-thirds since November. Galaxy recorded a $555mn loss in the second quarter.
The agreement between Galaxy and BitGo was one of the industry’s largest M&A deals when it was announced in May last year, in part contingent on Galaxy Digital receiving regulatory and shareholder approval to reorganise as a Delaware-listed company.
“We are still full steam ahead with listing,” Mike Novogratz, founder and chief executive, said in an interview. However Galaxy did not provide a specific timeframe for when it intends to list on the Nasdaq. A listing will still require approval from the SEC for its reorganisation in Delaware.
“We haven’t given any guidance on when the process will be completed,” Galaxy Digital said.
But the tie-up began to hit hurdles when Galaxy did not receive regulatory sign-off from the SEC to reorganise as a Deleware-based entity in the timeframe it expected. By March 2022, some deal terms were renegotiated including the number of Galaxy shares to be received by BitGo shareholders.
BitGo did not respond to a request for comment. Galaxy will not have to pay a termination fee, which could have topped $100mn, the company added.
The digital assets investment firm has also thus far been unsuccessful in convincing the US markets watchdog to approve its application for a bitcoin exchange-traded fund, first filed in April 2021.
Galaxy Digital is not the only company in the crypto industry having to push back an intended public listing. Pending SEC approval, crypto exchange Bullish has also delayed plans to list on the New York Stock Exchange through a deal with a special purpose acquisition company Far Peak Acquisition Corp.