Galaxy Digital CEO Mike Novogratz testified in court that U.S. securities regulators made it “very difficult” for the crypto investment firm to close a planned $1.2 billion buyout of digital asset custodian BitGo in 2021. The remarks, made under oath, offer one of the clearest accounts of how the Securities and Exchange Commission’s aggressive posture can scuttle a major deal in the crypto space.
Behind the testimony
Novogratz’s statements came during a court proceeding whose details are mostly sealed. He did not elaborate on the SEC’s specific demands but said the agency’s requirements created a roadblock the companies could not overcome. The merger, announced with much fanfare, was meant to combine Galaxy’s trading and investment operations with BitGo’s custody services. At $1.2 billion, it was one of the larger tie-ups in the digital asset sector at the time.
A merger that never closed
The deal ultimately fell apart. Novogratz’s testimony pins much of the blame on the SEC. He said the regulator’s conduct made it “very difficult” to complete the transaction. The failure of the merger was a blow to Galaxy Digital, which had seen the acquisition as a way to expand its service offerings and capture more of the institutional crypto market. BitGo, for its part, had been a leading custodian since 2013 and had sought a larger platform for growth.
Regulatory headwinds for crypto M&A
The testimony comes amid broader scrutiny of the SEC’s handling of crypto. Under Chair Gary Gensler, the agency has argued that many digital assets fall under its securities laws, requiring exchanges and custodians to register. Novogratz’s account suggests that this regulatory stance directly complicated the BitGo deal. Whether the SEC’s position was unique to this merger or part of a pattern remains an open question. The agency has not commented on the testimony.
The litigation in which Novogratz testified is ongoing. More details may emerge as the case progresses. For now, his words provide a rare window into the high-stakes negotiations behind one of crypto’s most prominent failed deals.
