Delaware Chancery Court Vice Chancellor James Laster sided the crypto lender’s decision to cancel its planned $1.2 billion acquisition, removing the potential financial burden associated with the abandoned tie-up.

The judge determined that Galaxy had a valid reason for terminating the deal, citing BitGo’s provision of “non-compliant” financial documents relating to its financial stability. However, BitGo said it plans to appeal the court’s ruling as it believes that Galaxy wrongfully terminated the agreement and will continue to pursue the same position through the appeals process.

“There are no facts alleged that could make it reasonably conceivable that the exercise of the termination right was inconsistent with the implied covenant of good faith and fair dealing,” Judge Laster said in the ruling.

“Now is the time for all of us to work together and focus on the task at hand: Upgrading the global financial system in a manner that promotes innovation and protects investors and consumers alike,” Galaxy Digital said in a tweet.

BitGo was seeking about $100 million worth of damages from Mike Novogratz’s crypto investment firm for pulling out of a deal to acquire the institutional crypto custody firm.

The move comes barely a month after Galaxy Digital terminated its proposal to acquire BitGo for $1.2 billion. The firm, run by Wall Street stalwart Mike Novogratz, exercised its right to terminate the acquisition agreement, citing BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021.

According to the company’s executive, that was one of the takeover deal’s requirements, so no termination fee is payable in connection with the termination.

However, BitGo was seeking damages because the merger agreement was not scheduled to expire until the end of last year.

Galaxy and BitGo renegotiated the acquisition agreement they signed back in May 2021. While the deal was originally planned to be completed in the first quarter of 2022, Novogratz said at the time he expects to finalize the takeover at a later date.

Key changes were made to the financial terms of the deal. The terminated acquisition terms would have seen BitGo shareholders receive 44.8 million newly issued Galaxy shares and $265 million in cash. However, the updated terms included a hefty fine of $100 million should Galaxy Digital fail to finish up the acquisition by December 31.

Although BitGo holders were said to own 12% of the combined company versus 10% to settle the original deal, the implied value was virtually unchanged from the $1.2 billion announced in 2021.

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