Galaxy Digital Holdings Ltd. today announced that it’s terminating a $1.2 billion deal to acquire enterprise cryptocurrency wallet startup BitGo Inc.

The digital asset merchant bank said it ended the deal after BitGo failed to “deliver audited financial statements for 2021” in compliance with the requirements of the acquisition agreement that had been inked in May 2021.

BitGo offers institutional clients custodial services for digital assets, such as bitcoin, Ethereum and other cryptocurrencies, including security, compliance and management solutions. A custodial service for cryptocurrency is essentially a third party offering a vault where individuals can store their tokens, manage their liquidity and protect them from being stolen.

Galaxy Digital offers digital asset management, trading and principal investment to individuals and institutional clientele interested in dealing in virtual currencies and assets.

The proposed acquisition would have been a great boon for Galaxy Digital, positioning the company as an end-to-end management platform with elite custody services and high-end security. The purchase would have added not just additional custody services for institutional clients, but also tax and regulatory compliance services, investment banking and more.

“The acquisition of BitGo establishes Galaxy Digital as a one-stop-shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology,” Mike Novogratz, founder and chief executive of Galaxy Digital, said at the time.

Before the deal, BitGo had already raised multiple funding venture rounds, including $57 million in October 2018 and $42.5 million in December 2017. The company’s investors included, of course, Galaxy Digital, and Valor Equity Partners DRW, Craft Ventures and Redpoint Ventures. Since the round in 2018, the company’s estimated valuation was $170 million.

Galaxy Digital was not the only company interested around that time. PayPal was also reportedly in talks to acquire BitGo in October 2020 before the acquisition deal.

The acquisition was set to be the crypto industry’s first $1 billion deal, noted The Wall Street Journal at the time.

“Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner,” said Novogratz. “We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”

Image: BitGo

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