Galaxy Digital buys BitGo in $1.2B deal, Bitcoin's biggest ever

Mike Novogratz’s crypto firm Galaxy Digital is acquiring custodian BitGo for $1.2 billion in cash and stock.

The deal marks the first ever billion-dollar deal in the crypto space, according to Dealogic data reported by the Wall Street Journal (WSJ).

Per a press release, Galaxy Digital will acquire BitGo with:

34 million company shares (about three quarters of the agreement)
$265 million cash from its balance sheet (the remainder)
Most of the cash deferred up to a year after the deal’s closure (fourth quarter of 2021).

BitGo mostly offers digital asset liquidity, custody, and financial services to large institutional players.

So, the acquisition complements Galaxy Digital’s existing offerings: trading, asset management, investment banking, and crypto mining.

Galaxy Digital’s market value went from $55 million to $2.5 billion in the past year.

In December, BitGo said it was the single largest on-chain Bitcoin processor — reportedly accounting for over 20% of on-chain transactions ($15 billion per month).

BitGo managed $16 billion in digital assets at the time.

Galaxy Digital, the crypto Goldman Sachs?

Galaxy Digital founder and chief exec Novogratz told WSJ that buying BitGo is about keeping competitive as the digital asset sector grows.

The New York hedge fund invests, helps secure funding, underwrites security token offerings, and generally bridges gaps between crypto and old world finance.

“In order for crypto to become this revolutionary transformation, you’re going to need bigger companies that are going to knock heads against the bigger businesses of traditional finance,” said Novogratz.

Novogratz also explained to CNBC the acquisition spiritually merges West Coast tech with East Coast finance.

"We are going to go from being a company that invested in blockchain infrastructure, that used blockchain infrastructure to one that builds blockchain infrastructure," says @Novogratz on Galaxy Digital's acquisition of @BitGo. pic.twitter.com/u2qoszqcwu
— Squawk Box (@SquawkCNBC) May 5, 2021

Novogratz says BitGo is the second largest crypto custodian in the world. Now, Galaxy Digital is too.

An ex-Goldman partner himself, Novogratz recently appointed former Goldman insider Michael Daffey to senior advisor and director board chairman — one of many Goldmans now at Galaxy Digital.

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