{"attribution":{"source":"legal.exploreworldai.com","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:del-219-2023-2024-05-22","cite_as":"NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:del-219-2023-2024-05-22)","license":"https://legal.exploreworldai.com/revision","version":"legal-2026-10-17","fingerprint":"ewai:us:e7344b","proof":"sha256:2798606f6e8fa1253ffb640a5e743cff5fb5e468356af156309ef9b00dab4e38","jurisdiction":"us","lang":"en","publisher":"NovaCopilot by ExploreWorld Legal","terms":"https://legal.exploreworldai.com/om"},"brand_source":"Source: NovaCopilot","item":{"schema_version":"1.0.0","id":"us:del-219-2023-2024-05-22","jurisdiction":"us","lang":"en","brand_source":"Source: NovaCopilot","brand":{"product":"NovaCopilot","platform":"ExploreWorldAI","infrastructure":"ExploreWorld Legal","infrastructure_url":"legal.exploreworldai.com","legal_entity":"Valkiv Ventures AB","permanent_url":"https://legal.exploreworldai.com/novacopilot","source":"Source: NovaCopilot","powered_by":"Powered by NovaCopilot","license":"https://legal.exploreworldai.com/licensvillkor"},"sections":[{"title":"Front matter","paragraphs":["para_1","para_2","para_3","para_4","para_5","para_6","para_7","para_8","para_9","para_10","para_11","para_12","para_13","para_14","para_15","para_16","para_17","para_18","para_19","para_20","para_21","para_22","para_23","para_24","para_25","para_26","para_27","para_28","para_29","para_30","para_31","para_32","para_33","para_34","para_35","para_36","para_37","para_38","para_39","para_40","para_41","para_42","para_43","para_44","para_45","para_46","para_47","para_48","para_49","para_50","para_51","para_52","para_53","para_54","para_55","para_56","para_57","para_58","para_59","para_60","para_61","para_62","para_63","para_64","para_65","para_66","para_67","para_68","para_69","para_70","para_71","para_72","para_73","para_74","para_75","para_76","para_77","para_78","para_79","para_80","para_81","para_82","para_83","para_84","para_85","para_86","para_87","para_88","para_89","para_90","para_91","para_92","para_93","para_94","para_95","para_96","para_97","para_98","para_99","para_100","para_101","para_102","para_103","para_104","para_105","para_106","para_107","para_108","para_109","para_110","para_111","para_112","para_113","para_114","para_115","para_116","para_117","para_118","para_119","para_120","para_121","para_122","para_123","para_124","para_125","para_126","para_127","para_128","para_129","para_130","para_131","para_132","para_133","para_134","para_135","para_136","para_137","para_138","para_139","para_140","para_141","para_142","para_143","para_144","para_145","para_146","para_147","para_148","para_149","para_150","para_151","para_152","para_153","para_154","para_155","para_156","para_157","para_158","para_159","para_160","para_161","para_162","para_163","para_164","para_165","para_166","para_167","para_168","para_169","para_170","para_171","para_172","para_173","para_174","para_175","para_176","para_177","para_178","para_179","para_180","para_181","para_182","para_183","para_184","para_185","para_186","para_187","para_188","para_189","para_190","para_191","para_192","para_193","para_194","para_195","para_196","para_197","para_198","para_199","para_200","para_201","para_202","para_203","para_204","para_205","para_206","para_207","para_208","para_209","para_210","para_211","para_212","para_213","para_214","para_215","para_216","para_217","para_218","para_219","para_220","para_221","para_222","para_223","para_224","para_225","para_226","para_227","para_228","para_229","para_230","para_231","para_232","para_233","para_234","para_235","para_236","para_237","para_238","para_239","para_240","para_241","para_242","para_243","para_244","para_245","para_246","para_247","para_248","para_249","para_250","para_251","para_252","para_253","para_254","para_255","para_256","para_257","para_258","para_259","para_260","para_261","para_262","para_263","para_264","para_265","para_266","para_267","para_268","para_269","para_270","para_271","para_272","para_273","para_274","para_275","para_276","para_277","para_278","para_279","para_280","para_281","para_282","para_283","para_284","para_285","para_286","para_287","para_288","para_289","para_290","para_291","para_292","para_293","para_294","para_295","para_296","para_297","para_298","para_299","para_300","para_301","para_302","para_303","para_304","para_305","para_306","para_307","para_308","para_309","para_310","para_311","para_312","para_313","para_314","para_315","para_316","para_317","para_318","para_319","para_320","para_321","para_322","para_323","para_324","para_325","para_326","para_327","para_328","para_329","para_330","para_331","para_332","para_333","para_334","para_335","para_336","para_337","para_338","para_339","para_340","para_341","para_342","para_343","para_344","para_345","para_346","para_347","para_348","para_349","para_350","para_351","para_352","para_353","para_354","para_355","para_356","para_357","para_358","para_359","para_360","para_361","para_362","para_363","para_364","para_365","para_366","para_367","para_368","para_369","para_370","para_371","para_372","para_373","para_374","para_375","para_376","para_377","para_378","para_379","para_380","para_381","para_382","para_383","para_384","para_385","para_386","para_387","para_388","para_389","para_390","para_391","para_392","para_393","para_394","para_395","para_396","para_397","para_398","para_399","para_400","para_401","para_402","para_403","para_404","para_405","para_406","para_407","para_408","para_409","para_410","para_411","para_412","para_413","para_414","para_415","para_416","para_417","para_418","para_419","para_420","para_421","para_422","para_423","para_424","para_425","para_426","para_427","para_428","para_429","para_430","para_431","para_432","para_433","para_434","para_435","para_436","para_437","para_438","para_439","para_440","para_441","para_442","para_443","para_444","para_445","para_446","para_447","para_448","para_449","para_450","para_451","para_452","para_453","para_454","para_455","para_456","para_457","para_458","para_459","para_460","para_461","para_462","para_463","para_464","para_465","para_466","para_467","para_468","para_469","para_470","para_471","para_472","para_473","para_474","para_475","para_476","para_477","para_478","para_479","para_480","para_481","para_482","para_483","para_484","para_485","para_486","para_487","para_488","para_489","para_490","para_491","para_492","para_493","para_494","para_495","para_496","para_497","para_498","para_499","para_500","para_501","para_502","para_503","para_504","para_505","para_506","para_507","para_508","para_509","para_510","para_511","para_512","para_513","para_514","para_515","para_516","para_517","para_518","para_519","para_520","para_521","para_522","para_523","para_524","para_525","para_526","para_527","para_528","para_529","para_530","para_531","para_532","para_533","para_534","para_535","para_536","para_537","para_538","para_539","para_540","para_541","para_542","para_543","para_544","para_545","para_546","para_547","para_548","para_549","para_550","para_551","para_552","para_553","para_554","para_555","para_556","para_557","para_558","para_559","para_560","para_561","para_562","para_563","para_564","para_565","para_566","para_567","para_568","para_569","para_570","para_571","para_572","para_573","para_574","para_575","para_576","para_577","para_578","para_579","para_580","para_581","para_582","para_583","para_584","para_585","para_586","para_587","para_588","para_589","para_590","para_591","para_592","para_593","para_594","para_595","para_596","para_597","para_598","para_599","para_600","para_601","para_602","para_603","para_604","para_605","para_606","para_607","para_608","para_609","para_610","para_611","para_612","para_613","para_614","para_615","para_616","para_617","para_618","para_619","para_620","para_621","para_622","para_623","para_624","para_625","para_626","para_627","para_628","para_629","para_630","para_631","para_632","para_633","para_634","para_635","para_636","para_637","para_638","para_639","para_640","para_641","para_642","para_643","para_644","para_645","para_646","para_647","para_648","para_649","para_650","para_651","para_652","para_653","para_654","para_655","para_656","para_657","para_658","para_659","para_660","para_661","para_662","para_663","para_664","para_665","para_666","para_667","para_668","para_669","para_670","para_671","para_672","para_673","para_674","para_675","para_676","para_677","para_678","para_679","para_680","para_681","para_682","para_683","para_684","para_685","para_686","para_687","para_688","para_689","para_690","para_691","para_692","para_693","para_694","para_695","para_696","para_697","para_698","para_699","para_700","para_701","para_702","para_703","para_704","para_705","para_706","para_707","para_708","para_709","para_710","para_711","para_712","para_713","para_714","para_715","para_716","para_717","para_718","para_719","para_720","para_721","para_722","para_723","para_724","para_725","para_726","para_727","para_728","para_729","para_730","para_731","para_732","para_733","para_734","para_735","para_736","para_737","para_738","para_739","para_740","para_741","para_742","para_743","para_744","para_745","para_746","para_747","para_748","para_749","para_750","para_751","para_752","para_753","para_754","para_755","para_756","para_757","para_758","para_759","para_760","para_761","para_762","para_763","para_764","para_765","para_766","para_767","para_768","para_769","para_770","para_771","para_772","para_773","para_774","para_775","para_776","para_777","para_778","para_779","para_780","para_781","para_782","para_783","para_784","para_785","para_786","para_787","para_788","para_789","para_790","para_791","para_792","para_793","para_794","para_795","para_796","para_797","para_798","para_799","para_800","para_801","para_802","para_803","para_804","para_805","para_806","para_807","para_808","para_809","para_810","para_811","para_812","para_813","para_814","para_815","para_816","para_817","para_818","para_819","para_820","para_821","para_822","para_823","para_824","para_825","para_826","para_827","para_828","para_829","para_830","para_831","para_832","para_833","para_834","para_835","para_836","para_837","para_838","para_839","para_840","para_841","para_842","para_843","para_844","para_845","para_846","para_847","para_848","para_849","para_850","para_851","para_852","para_853","para_854","para_855","para_856","para_857","para_858","para_859","para_860","para_861","para_862","para_863","para_864","para_865","para_866","para_867","para_868","para_869","para_870","para_871","para_872","para_873","para_874","para_875","para_876","para_877","para_878","para_879","para_880","para_881","para_882","para_883","para_884","para_885","para_886","para_887","para_888","para_889","para_890","para_891","para_892","para_893","para_894","para_895","para_896","para_897","para_898","para_899","para_900","para_901","para_902","para_903","para_904","para_905","para_906","para_907","para_908","para_909","para_910","para_911","para_912","para_913","para_914","para_915","para_916","para_917","para_918","para_919","para_920","para_921","para_922","para_923","para_924","para_925","para_926","para_927","para_928","para_929","para_930","para_931","para_932","para_933","para_934","para_935","para_936","para_937","para_938","para_939","para_940","para_941","para_942","para_943","para_944","para_945","para_946","para_947","para_948","para_949","para_950","para_951","para_952","para_953","para_954","para_955","para_956","para_957","para_958","para_959","para_960","para_961","para_962","para_963","para_964","para_965","para_966","para_967","para_968","para_969","para_970","para_971","para_972","para_973","para_974","para_975","para_976","para_977","para_978","para_979","para_980","para_981","para_982","para_983","para_984","para_985","para_986","para_987","para_988","para_989","para_990","para_991","para_992","para_993","para_994","para_995","para_996","para_997","para_998","para_999","para_1000","para_1001","para_1002","para_1003","para_1004","para_1005","para_1006","para_1007","para_1008","para_1009","para_1010","para_1011","para_1012","para_1013","para_1014","para_1015","para_1016","para_1017","para_1018","para_1019","para_1020","para_1021","para_1022","para_1023","para_1024","para_1025","para_1026","para_1027","para_1028","para_1029","para_1030","para_1031","para_1032","para_1033","para_1034","para_1035","para_1036","para_1037","para_1038"],"kind":"front_matter"}],"paragraphs":[{"text":"IN THE SUPREME COURT OF THE STATE OF DELAWARE","paragraph_id":"para_1"},{"text":"BITGO HOLDINGS, INC., §","paragraph_id":"para_2"},{"text":"§ No. 219, 2023","paragraph_id":"para_3"},{"text":"Plaintiff Below, §","paragraph_id":"para_4"},{"text":"Appellant, § Court Below: Court of Chancery","paragraph_id":"para_5"},{"text":"§ of the State of Delaware","paragraph_id":"para_6"},{"text":"v. §","paragraph_id":"para_7"},{"text":"§ C.A. No. 2022-0808","paragraph_id":"para_8"},{"text":"GALAXY DIGITAL HOLDINGS, §","paragraph_id":"para_9"},{"text":"LTD., GALAXY DIGITAL §","paragraph_id":"para_10"},{"text":"HOLDINGS LP, and GALAXY §","paragraph_id":"para_11"},{"text":"DIGITAL INC., §","paragraph_id":"para_12"},{"text":"§","paragraph_id":"para_13"},{"text":"Defendants Below, §","paragraph_id":"para_14"},{"text":"Appellees. §","paragraph_id":"para_15"},{"text":"Submitted: February 7, 2024","paragraph_id":"para_16"},{"text":"Decided: May 22, 2024","paragraph_id":"para_17"},{"text":"Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW, and","paragraph_id":"para_18"},{"text":"GRIFFITHS, Justices constituting the court en banc.","paragraph_id":"para_19"},{"text":"Upon appeal from the Court of Chancery. REVERSED and REMANDED.","paragraph_id":"para_20"},{"text":"A. Thompson Bayliss, Esquire (argued), Michael A. Barlow, Esquire, Eliezer Y.","paragraph_id":"para_21"},{"text":"Feinstein, Esquire, ABRAMS & BAYLISS LLP, Wilmington, Delaware; R. Brian","paragraph_id":"para_22"},{"text":"Timmons, Esquire, David M. Grable, Esquire, QUINN EMANUEL URQUHART","paragraph_id":"para_23"},{"text":"& SULLIVAN, LLP, Los Angeles, California; David Cooper, Esquire, Deborah K.","paragraph_id":"para_24"},{"text":"Brown, Esquire, Nathan Goralnik, Esquire, QUINN EMANUEL URQUHART &","paragraph_id":"para_25"},{"text":"SULLIVAN, LLP, New York, New York, for Appellants BitGo Holdings, Inc.","paragraph_id":"para_26"},{"text":"Bradley R. Aronstam, Esquire, S. Michael Sirkin, Esquire, ROSS ARONSTAM &","paragraph_id":"para_27"},{"text":"MORITZ LLP, Wilmington, Delaware; Andrew Ditchfield, Esquire (argued), Brian","paragraph_id":"para_28"},{"text":"M. Burnovski, Esquire, Pascale Bibi, Esquire, Kyra Macy Kaufman, Esquire,","paragraph_id":"para_29"},{"text":"DAVIS POLK & WARDWELL LLP, New York, New York; Neal Kumar Katyal,","paragraph_id":"para_30"},{"text":"Esquire, Nathaniel A.G. Zelinsky, Esquire, HOGAN LOVELLS US LLP,","paragraph_id":"para_31"},{"text":"Washington, D.C., Dennis H. Tracey, III, Esquire, HOGAN LOVELLS US LLP,","paragraph_id":"para_32"},{"text":"New York, New York, for Appellees Galaxy Digital Holdings Ltd., Galaxy Digital","paragraph_id":"para_33"},{"text":"Holdings LP, and Galaxy Digital Inc.","paragraph_id":"para_34"},{"text":"2","paragraph_id":"para_35"},{"text":"TRAYNOR, Justice:","paragraph_id":"para_36","court_paragraph":2},{"text":"In this appeal, we are asked to review the Court of Chancery’s interpretation","paragraph_id":"para_37"},{"text":"of a merger-agreement provision that required the acquired company—BitGo—to","paragraph_id":"para_38"},{"text":"submit audited financial statements to the acquiror—Galaxy—by a specified date.","paragraph_id":"para_39"},{"text":"When BitGo submitted the financial statements in a timely manner, Galaxy protested","paragraph_id":"para_40"},{"text":"that the statements were deficient because they failed to apply recently published","paragraph_id":"para_41"},{"text":"guidance from the Securities and Exchange Commission’s staff. BitGo did not agree","paragraph_id":"para_42"},{"text":"that the time was ripe for the application of that guidance, but took advantage of a","paragraph_id":"para_43"},{"text":"provision in the merger agreement that allowed for another financial-statement","paragraph_id":"para_44"},{"text":"submission and, according to Galaxy, extended the final deadline for completing the","paragraph_id":"para_45"},{"text":"merger, or the “end date.” When Galaxy received the second submission, this time","paragraph_id":"para_46"},{"text":"applying the guidance not applied in the first submission, Galaxy found fault with","paragraph_id":"para_47"},{"text":"the submission for other reasons—specifically, its inclusion of a “restriction on use”","paragraph_id":"para_48"},{"text":"legend—and terminated the merger agreement.","paragraph_id":"para_49"},{"text":"BitGo then sued Galaxy in the Court of Chancery, alleging wrongful","paragraph_id":"para_50"},{"text":"repudiation and breach of the merger agreement. Galaxy moved to dismiss the","paragraph_id":"para_51"},{"text":"complaint, arguing that BitGo’s claims failed as a matter of law because its","paragraph_id":"para_52"},{"text":"noncompliant financial statements provided Galaxy with a valid basis to terminate","paragraph_id":"para_53"},{"text":"the merger agreement. BitGo countered that both sets of statements, the ones that","paragraph_id":"para_54"},{"text":"3","paragraph_id":"para_55"},{"text":"did not apply the SEC staff’s guidance and those that did, were compliant. The Court","paragraph_id":"para_56","court_paragraph":3},{"text":"of Chancery sided with Galaxy and dismissed the complaint.","paragraph_id":"para_57"},{"text":"As discussed in detail below, whether the financial statements at issue were","paragraph_id":"para_58"},{"text":"compliant turns on the interpretation of the merger agreement’s definition of the term","paragraph_id":"para_59"},{"text":"“Company 2021 Audited Financial Statements.” The parties agree that, should this","paragraph_id":"para_60"},{"text":"Court determine that BitGo’s first submission—the submission with financial","paragraph_id":"para_61"},{"text":"statements that did not apply the SEC staff’s guidance—fit that definition, the","paragraph_id":"para_62"},{"text":"adequacy of the second submission would be irrelevant and the Court of Chancery’s","paragraph_id":"para_63"},{"text":"decision should be reversed. If, however, the first submission was noncompliant,","paragraph_id":"para_64"},{"text":"we must then assess the adequacy of the second submission. As with the first","paragraph_id":"para_65"},{"text":"submission, if the second was compliant, reversal would be required.","paragraph_id":"para_66"},{"text":"Having considered the parties’ respective positions, we have concluded that","paragraph_id":"para_67"},{"text":"both parties have proffered reasonable interpretations of the merger agreement’s","paragraph_id":"para_68"},{"text":"definition of “Company 2021 Audited Financial Statements.” In a word, the","paragraph_id":"para_69"},{"text":"definition is ambiguous. We therefore reverse the Court of Chancery’s judgment","paragraph_id":"para_70"},{"text":"and remand for the consideration of such extrinsic evidence as may be appropriate","paragraph_id":"para_71"},{"text":"to resolve this ambiguity.","paragraph_id":"para_72"},{"text":"4","paragraph_id":"para_73"},{"text":"I","paragraph_id":"para_74","court_paragraph":4},{"text":"A","paragraph_id":"para_75"},{"text":"Plaintiff BitGo Holdings, Inc. (“BitGo” or “the Company”), a Delaware","paragraph_id":"para_76"},{"text":"corporation, is a privately held technology company that established the first","paragraph_id":"para_77"},{"text":"independent, regulated custodial business for digital assets.1","paragraph_id":"para_78"},{"text":"Defendant Galaxy Digital Holdings Ltd. is a company formed under the laws","paragraph_id":"para_79"},{"text":"of the Cayman Islands and headquartered in New York. Galaxy Digital Holdings","paragraph_id":"para_80"},{"text":"Ltd. offers investment banking and other financial services in the cryptocurrency","paragraph_id":"para_81"},{"text":"sector. Defendant Galaxy Digital Holdings LP is a limited partnership formed and","paragraph_id":"para_82"},{"text":"registered under the laws of the Cayman Islands and headquartered in New York.","paragraph_id":"para_83"},{"text":"Defendant Galaxy Digital Inc. is a Delaware corporation with its principal place of","paragraph_id":"para_84"},{"text":"business in New York and is a direct wholly owned subsidiary of Galaxy Digital","paragraph_id":"para_85"},{"text":"Holdings Ltd. We refer to the defendants collectively as “Galaxy.”","paragraph_id":"para_86"},{"text":"B","paragraph_id":"para_87"},{"text":"Galaxy became a strategic investor in BitGo in 2018. This investment brought","paragraph_id":"para_88"},{"text":"with it an observer seat on BitGo’s board of directors, through which Galaxy became","paragraph_id":"para_89"},{"text":"privy to commercially sensitive and confidential information about the Company.","paragraph_id":"para_90"},{"text":"By December 2020, aware of BitGo’s “advanced discussions with other leading","paragraph_id":"para_91"},{"text":"1 We draw the facts from the well-pleaded allegations in the verified amended complaint and from","paragraph_id":"para_92"},{"text":"documents integral to it or incorporated by reference.","paragraph_id":"para_93"},{"text":"5","paragraph_id":"para_94"},{"text":"financial technology companies about possible strategic transactions[,]” Galaxy","paragraph_id":"para_95","court_paragraph":5},{"text":"approached BitGo to discuss “potential synergies between the two companies[.]”2","paragraph_id":"para_96"},{"text":"BitGo chose to pursue a transaction with Galaxy (the “Acquisition”), and the parties","paragraph_id":"para_97"},{"text":"entered into a merger agreement in May 2021 (the “Original Agreement”). Under","paragraph_id":"para_98"},{"text":"the Original Agreement, the end date for the transaction was set for March 31, 2022,","paragraph_id":"para_99"},{"text":"allowing Galaxy time to, among other things, reincorporate in the United States and","paragraph_id":"para_100"},{"text":"register its shares (together, the “Reorganization”) with the Securities and Exchange","paragraph_id":"para_101"},{"text":"Commission (the “SEC”).","paragraph_id":"para_102"},{"text":"Galaxy told BitGo that this Reorganization, which contemplated the listing of","paragraph_id":"para_103"},{"text":"Galaxy’s shares on the Nasdaq exchange, was already underway independently from","paragraph_id":"para_104"},{"text":"the Original Agreement. The Reorganization would require the approval of","paragraph_id":"para_105"},{"text":"Galaxy’s shareholders and, hence, Galaxy was required to file an S-4 registration","paragraph_id":"para_106"},{"text":"statement with the SEC. Because Galaxy would acquire all of BitGo’s outstanding","paragraph_id":"para_107"},{"text":"shares in exchange for 33.8 million shares of Galaxy’s reorganized entity and $265","paragraph_id":"para_108"},{"text":"million in cash, the Original Agreement’s success depended on the success of","paragraph_id":"para_109"},{"text":"Galaxy’s Reorganization. The aggregate consideration for acquiring BitGo, based","paragraph_id":"para_110"},{"text":"on Galaxy’s then-current share price, was approximately $1.2 billion.","paragraph_id":"para_111"},{"text":"According to the complaint, the parties allocated the risks associated with the","paragraph_id":"para_112"},{"text":"Reorganization almost entirely to Galaxy. For example, Galaxy assumed","paragraph_id":"para_113"},{"text":"2 See App. to Opening Br. at A36.","paragraph_id":"para_114"},{"text":"6","paragraph_id":"para_115"},{"text":"responsibility for and control over governmental approvals. But BitGo bore a","paragraph_id":"para_116","court_paragraph":6},{"text":"critical, albeit limited, role in helping Galaxy submit information for inclusion in an","paragraph_id":"para_117"},{"text":"effective registration statement. BitGo was required to submit to Galaxy its financial","paragraph_id":"para_118"},{"text":"statements for the year ended December 31, 2020, which the agreement defined as","paragraph_id":"para_119"},{"text":"“Company 2020 Audited Financial Statements.” These financial statements were to","paragraph_id":"para_120"},{"text":"be “‘in a form that complies with the requirements of Regulation S-X for an offering","paragraph_id":"para_121"},{"text":"of equity securities pursuant to a registration statement on Form S-1 for a non-","paragraph_id":"para_122"},{"text":"reporting company.’”3 BitGo’s failure to submit the financial statements to Galaxy","paragraph_id":"para_123"},{"text":"on time would provide Galaxy with a termination right. No termination fees of any","paragraph_id":"para_124"},{"text":"kind, though, were available under the Original Agreement.","paragraph_id":"para_125"},{"text":"BitGo submitted the Company 2020 Audited Financial Statements to Galaxy","paragraph_id":"para_126"},{"text":"in September 2021. Galaxy accepted them. Together with a report from BitGo’s","paragraph_id":"para_127"},{"text":"auditor, Galaxy provided the statements as part of its confidential draft registration","paragraph_id":"para_128"},{"text":"statement to the SEC. In the ensuing months, BitGo assisted Galaxy by responding","paragraph_id":"para_129"},{"text":"to numerous data requests and consulting with Galaxy’s finance and legal teams, as","paragraph_id":"para_130"},{"text":"Galaxy engaged with the SEC and its extensive commentary on the draft","paragraph_id":"para_131"},{"text":"submissions. The SEC’s comments inquired into Galaxy’s accounting and internal","paragraph_id":"para_132"},{"text":"controls practices, which, according to the complaint, included significant errors and","paragraph_id":"para_133"},{"text":"weaknesses; by contrast, the SEC did not raise concerns about BitGo’s financial","paragraph_id":"para_134"},{"text":"3 Id. at A41.","paragraph_id":"para_135"},{"text":"7","paragraph_id":"para_136"},{"text":"statements. After several rounds of revisions, Galaxy publicly filed its S-4","paragraph_id":"para_137","court_paragraph":7},{"text":"registration statement on January 28, 2022, which included BitGo’s 2020 Audited","paragraph_id":"para_138"},{"text":"Financial Statements and other information.","paragraph_id":"para_139"},{"text":"It became clear to Galaxy by February 2022 that time was running out for","paragraph_id":"para_140"},{"text":"closing the Acquisition under the Original Agreement. Galaxy would not be able to","paragraph_id":"para_141"},{"text":"secure an effective S-4 registration statement, notice a shareholder meeting, hold a","paragraph_id":"para_142"},{"text":"shareholder vote, and complete the Reorganization and Acquisition before March","paragraph_id":"para_143"},{"text":"31, 2022. But BitGo was reluctant to grant Galaxy an extension. After all, the","paragraph_id":"para_144"},{"text":"transaction had been pending for nearly a year, foreclosing other potentially lucrative","paragraph_id":"para_145"},{"text":"transactions, and the industry was experiencing a boom. To assuage BitGo’s","paragraph_id":"para_146"},{"text":"concerns, the parties agreed to several new terms, including a reverse termination","paragraph_id":"para_147"},{"text":"fee of $100 million, payable to BitGo if, among other reasons, the Acquisition did","paragraph_id":"para_148"},{"text":"not close by the new end date. The parties signed an amended agreement (the","paragraph_id":"para_149"},{"text":"“Amended Agreement”) on March 30, 2022, the day before the Original","paragraph_id":"para_150"},{"text":"Agreement’s end date.","paragraph_id":"para_151"},{"text":"The Amended Agreement bought Galaxy more time by pushing the end date","paragraph_id":"para_152"},{"text":"to December 31, 2022. And if certain conditions were met, then the end date could","paragraph_id":"para_153"},{"text":"be extended for three more months. Because Galaxy was required to submit an","paragraph_id":"para_154"},{"text":"amended S-4 registration statement to the SEC, BitGo was again required to deliver","paragraph_id":"para_155"},{"text":"financial statements to Galaxy—this time what the agreement referred to as","paragraph_id":"para_156"},{"text":"8","paragraph_id":"para_157"},{"text":"“Company 2021 Audited Financial Statements.” The definition of this term, which","paragraph_id":"para_158","court_paragraph":8},{"text":"is otherwise identical to the definition of Company 2020 Audited Financial","paragraph_id":"para_159"},{"text":"Statements, updated the year, replaced a reference to a specific auditor with a general","paragraph_id":"para_160"},{"text":"one, and required a report for 2021 only rather than reports for 2020 and 2019.","paragraph_id":"para_161"},{"text":"Because the 2021 definition is central to the parties’ dispute, we quote it here in full:","paragraph_id":"para_162"},{"text":"“Company 2021 Audited Financial Statements” means the audited","paragraph_id":"para_163"},{"text":"financial statements of the Company and its Subsidiaries as of and for","paragraph_id":"para_164"},{"text":"the year ended December 31, 2021, including the accompanying notes,","paragraph_id":"para_165"},{"text":"prepared in accordance with GAAP and in a form that complies with","paragraph_id":"para_166"},{"text":"the requirements of Regulation S-X for an offering of equity securities","paragraph_id":"para_167"},{"text":"pursuant to a registration statement on Form S-1 for a non-reporting","paragraph_id":"para_168"},{"text":"company and audited in accordance with PCAOB auditing standards","paragraph_id":"para_169"},{"text":"by a PCAOB-qualified accounting firm that is independent from the","paragraph_id":"para_170"},{"text":"Company and such Subsidiaries under Rule 2-01 of Regulation S-X","paragraph_id":"para_171"},{"text":"under the Securities Act, together with auditor’s reports from such","paragraph_id":"para_172"},{"text":"independent accounting firm (which reports shall include an","paragraph_id":"para_173"},{"text":"unqualified opinion that such financial statements present fairly, in all","paragraph_id":"para_174"},{"text":"material respects, the consolidated financial position of the Company","paragraph_id":"para_175"},{"text":"and its Subsidiaries as of December 31, 2021 and the results of their","paragraph_id":"para_176"},{"text":"operations and their cash flows for the year ended in accordance with","paragraph_id":"para_177"},{"text":"GAAP).4","paragraph_id":"para_178"},{"text":"When companies like Galaxy seek to register their securities on a stock","paragraph_id":"para_179"},{"text":"exchange like Nasdaq, the SEC requires the applicants to submit registration","paragraph_id":"para_180"},{"text":"statements in varying forms. For example, because Galaxy was attempting to","paragraph_id":"para_181"},{"text":"consummate both the Reorganization and Acquisition, Galaxy originally filed a","paragraph_id":"para_182"},{"text":"Form S-1 (initial registration statement) and Form S-4 (registration statement for a","paragraph_id":"para_183"},{"text":"4 Id. at A100–01.","paragraph_id":"para_184"},{"text":"9","paragraph_id":"para_185"},{"text":"company involved in a merger or acquisition). SEC Regulation S-X “sets forth the","paragraph_id":"para_186","court_paragraph":9},{"text":"form and content of and requirements for” financial statements to be filed as a part","paragraph_id":"para_187"},{"text":"of some such registration statements.5 For the SEC to declare a registration","paragraph_id":"para_188"},{"text":"statement effective, the statement must comply with Regulation S-X—and the","paragraph_id":"para_189"},{"text":"parties drafted the Amended Agreement with this compliance goal in mind.","paragraph_id":"para_190"},{"text":"The Amended Agreement defines neither Regulation S-X nor Rule 2-01 of","paragraph_id":"para_191"},{"text":"Regulation S-X. But § 1.02 of the Amended Agreement, titled “Other Definitional","paragraph_id":"para_192"},{"text":"and Interpretative Provisions,” states that “[r]eferences to any statute, rule,","paragraph_id":"para_193"},{"text":"regulation, law or Applicable Law shall be deemed to refer to such statute, rule,","paragraph_id":"para_194"},{"text":"regulation, law or Applicable Law as amended or supplemented from time to time","paragraph_id":"para_195"},{"text":"and to any rules, regulations and interpretations promulgated thereunder.”6","paragraph_id":"para_196"},{"text":"Applicable Law, in contrast, means","paragraph_id":"para_197"},{"text":"with respect to any Person, any transnational, domestic or foreign","paragraph_id":"para_198"},{"text":"federal, state, provincial or local law (statutory, common or otherwise),","paragraph_id":"para_199"},{"text":"constitution, treaty, convention, ordinance, code, rule, regulation,","paragraph_id":"para_200"},{"text":"order, injunction, judgment, decree, ruling or other similar requirement","paragraph_id":"para_201"},{"text":"enacted, adopted, promulgated or applied, in each case, by a","paragraph_id":"para_202"},{"text":"Governmental Authority, and authoritative interpretations of each of","paragraph_id":"para_203"},{"text":"the foregoing, in each case that is binding upon or applicable to such","paragraph_id":"para_204"},{"text":"Person or its properties.7","paragraph_id":"para_205"},{"text":"5 17 C.F.R. § 210.01.","paragraph_id":"para_206"},{"text":"6 App. to Opening Br. at A129.","paragraph_id":"para_207"},{"text":"7 Id. at A96.","paragraph_id":"para_208"},{"text":"10","paragraph_id":"para_209"},{"text":"The parties also selected April 30, 2022 as the deadline for submitting the","paragraph_id":"para_210","court_paragraph":10},{"text":"2021 statements (the “April Submission”). BitGo’s failure to furnish the statements","paragraph_id":"para_211"},{"text":"by that date would have two consequences: (i) BitGo would then have until July 31,","paragraph_id":"para_212"},{"text":"2022 to deliver the statements (the “July Submission”) and (ii) the end date would","paragraph_id":"para_213"},{"text":"automatically be extended to March 2023. If BitGo failed to submit compliant","paragraph_id":"para_214"},{"text":"statements to Galaxy by July 31, then Galaxy could exercise its right to terminate","paragraph_id":"para_215"},{"text":"the agreement without having to pay the reverse termination fee.","paragraph_id":"para_216"},{"text":"The day after the Amended Agreement was signed, the SEC published Staff","paragraph_id":"para_217"},{"text":"Accounting Bulletin No. 121 (“SAB 121” or the “Bulletin”). The Bulletin detailed","paragraph_id":"para_218"},{"text":"new accounting guidance applicable to filings by certain public companies and SEC","paragraph_id":"para_219"},{"text":"registrants that safeguard, or act as custodians for, digital assets as part of their","paragraph_id":"para_220"},{"text":"business plan. Early in the document, the Bulletin disclosed that the","paragraph_id":"para_221"},{"text":"statements in staff accounting bulletins are not rules or interpretations","paragraph_id":"para_222"},{"text":"of the Commission, nor are they published as bearing the Commission’s","paragraph_id":"para_223"},{"text":"official approval. They represent staff interpretations and practices","paragraph_id":"para_224"},{"text":"followed by the staff in the Division of Corporation Finance and the","paragraph_id":"para_225"},{"text":"Office of the Chief Accountant in administering the disclosure","paragraph_id":"para_226"},{"text":"requirements of the federal securities laws.8","paragraph_id":"para_227"},{"text":"Later in the document, the Bulletin describes the parties whom the staff expects will","paragraph_id":"para_228"},{"text":"comply with SAB 121, together with timelines for implementation.","paragraph_id":"para_229"},{"text":"8 Id. at A804.","paragraph_id":"para_230"},{"text":"11","paragraph_id":"para_231"},{"text":"SAB 121 became effective on April 11, fewer than three weeks before BitGo","paragraph_id":"para_232","court_paragraph":11},{"text":"was to submit its financial statements to Galaxy. Although BitGo’s auditor was","paragraph_id":"para_233"},{"text":"aware of SAB 121, the auditor did not apply it to the Company 2021 Audited","paragraph_id":"para_234"},{"text":"Financial Statements that BitGo supplied to Galaxy on April 29, 2022, the day before","paragraph_id":"para_235"},{"text":"the submission deadline. The Company 2021 Audited Financial Statements were","paragraph_id":"para_236"},{"text":"audited and presented in the same form as the Company 2020 Audited Financial","paragraph_id":"para_237"},{"text":"Statements that BitGo had delivered to, and were accepted by, Galaxy seven months","paragraph_id":"para_238"},{"text":"earlier. Accompanying BitGo’s Company 2021 Audited Financial Statements was","paragraph_id":"para_239"},{"text":"the auditor’s opinion that the “‘financial statements present fairly, in all material","paragraph_id":"para_240"},{"text":"respects, the financial position of [BitGo] as of December 31, 2021, and the results","paragraph_id":"para_241"},{"text":"of its operations and its cash flows for the year then ended in accordance with","paragraph_id":"para_242"},{"text":"accounting principles generally accepted in the United States.’”9 The auditor also","paragraph_id":"para_243"},{"text":"stated in a note that","paragraph_id":"para_244"},{"text":"SAB 121 will likely require the Company to record an obligation to the","paragraph_id":"para_245"},{"text":"balance sheet relating to its obligation to safeguard any crypto-assets","paragraph_id":"para_246"},{"text":"held for their platform users and a corresponding indemnification asset","paragraph_id":"para_247"},{"text":"of assets held under custody. The Company is currently evaluating the","paragraph_id":"para_248"},{"text":"effect this new guidance will have related to obligations to safeguard","paragraph_id":"para_249"},{"text":"crypto-assets, corresponding indemnification asset[s] and its","paragraph_id":"para_250"},{"text":"consolidated financial statements.10","paragraph_id":"para_251"},{"text":"9 Id. at A50.","paragraph_id":"para_252"},{"text":"10 Id. at A51, A688.","paragraph_id":"para_253"},{"text":"12","paragraph_id":"para_254"},{"text":"The day after BitGo’s April Submission, Galaxy responded that, because the","paragraph_id":"para_255","court_paragraph":12},{"text":"financial statements did not “‘appear to give effect to SAB 121,’” the statements","paragraph_id":"para_256"},{"text":"failed to meet the definition of Company 2021 Audited Financial Statements.11","paragraph_id":"para_257"},{"text":"According to Galaxy, this meant that the end date was automatically extended.","paragraph_id":"para_258"},{"text":"BitGo responded that SAB 121 was inapplicable to the statements. BitGo insisted,","paragraph_id":"para_259"},{"text":"as the complaint recounts, that SAB 121’s instructions made plain that it applied to","paragraph_id":"para_260"},{"text":"entities other than BitGo and, in any event, on a timeline for implementation well","paragraph_id":"para_261"},{"text":"after the April Submission. Galaxy nevertheless held fast to its position—that the","paragraph_id":"para_262"},{"text":"submission’s failure to apply SAB 121 meant the financial statements were","paragraph_id":"para_263"},{"text":"contractually noncompliant—but raised no other concerns about the statements.","paragraph_id":"para_264"},{"text":"Galaxy emphasized that BitGo should apply SAB 121 to assist Galaxy with its goal","paragraph_id":"para_265"},{"text":"of securing SEC approvals. BitGo disagreed with Galaxy’s position and stated that","paragraph_id":"para_266"},{"text":"the end date remained December 31, 2022. Even so, BitGo began preparing","paragraph_id":"para_267"},{"text":"Company 2021 Audited Financial Statements that applied SAB 121, in what BitGo","paragraph_id":"para_268"},{"text":"described as an “accommodation” to Galaxy.12","paragraph_id":"para_269"},{"text":"Meanwhile, Galaxy was not only facing challenges in securing SEC","paragraph_id":"para_270"},{"text":"approvals; it was facing financial headwinds too. Signs of financial problems","paragraph_id":"para_271"},{"text":"emerged when Galaxy reported a loss of $111.7 million for the first quarter of 2022.","paragraph_id":"para_272"},{"text":"11 Id. at A52.","paragraph_id":"para_273"},{"text":"12 Id. at A54.","paragraph_id":"para_274"},{"text":"13","paragraph_id":"para_275"},{"text":"Near that time, the parties executed the Amended Agreement when Galaxy’s share","paragraph_id":"para_276","court_paragraph":13},{"text":"price was CA$24.82,13 a decrease from the calendar-high price of CA$26.65 posted","paragraph_id":"para_277"},{"text":"two days earlier. Less than a month later and on the same day of the April","paragraph_id":"para_278"},{"text":"Submission, Galaxy’s share price dropped to CA$14.05, a symptom of broader stress","paragraph_id":"para_279"},{"text":"in the cryptocurrency and bitcoin markets. Within days, the Luna cryptocurrency,","paragraph_id":"para_280"},{"text":"in which Galaxy was heavily invested, suddenly collapsed, ushering in what has","paragraph_id":"para_281"},{"text":"been described in the industry as the “crypto winter.”","paragraph_id":"para_282"},{"text":"The day that Luna collapsed, Galaxy’s shares closed at CA$7.72. The next","paragraph_id":"para_283"},{"text":"day, Galaxy took the unusual step of furnishing a preliminary, mid-quarter update","paragraph_id":"para_284"},{"text":"of its capital and liquidity position. Galaxy disclosed that it had suffered an","paragraph_id":"para_285"},{"text":"approximately $300 million loss thus far in the quarter-to-date alone.","paragraph_id":"para_286"},{"text":"Contextualizing the loss in terms of broader trends, Galaxy revealed that “‘total","paragraph_id":"para_287"},{"text":"cryptocurrency market capitalization had decreased approximately 40%.’”14 In an","paragraph_id":"para_288"},{"text":"open letter to shareholders a few days later, Galaxy’s CEO Mike Novogratz","paragraph_id":"para_289"},{"text":"acknowledged that Luna was “‘a big idea that failed,’” and said that Galaxy would","paragraph_id":"para_290"},{"text":"have to “‘manage its balance sheet appropriately with respect to the macroeconomic","paragraph_id":"para_291"},{"text":"backdrop,’” which would “‘remain challenging[.]’”15 As the second quarter of 2022","paragraph_id":"para_292"},{"text":"13 “CA” is shorthand for Canadian dollars.","paragraph_id":"para_293"},{"text":"14 App. to Opening Br. at A56 (emphasis omitted).","paragraph_id":"para_294"},{"text":"15 Id. at A57.","paragraph_id":"para_295"},{"text":"14","paragraph_id":"para_296"},{"text":"ultimately turned out, Galaxy’s losses ballooned to $554.7 million, a figure more","paragraph_id":"para_297","court_paragraph":14},{"text":"than triple the quarterly loss from the prior year.","paragraph_id":"para_298"},{"text":"The complaint alleges that, in mid-May 2022, the Amended Agreement, with","paragraph_id":"para_299"},{"text":"its $1.2 billion price tag, represented Galaxy’s most costly upcoming financial","paragraph_id":"para_300"},{"text":"commitment. At the same time, during an earnings call, Novogratz expressed that","paragraph_id":"para_301"},{"text":"it was “‘so frustrating’” how much time the process was taking for not only Galaxy","paragraph_id":"para_302"},{"text":"but also others in the industry to secure approvals for the U.S. listing of their shares.16","paragraph_id":"para_303"},{"text":"Within the same month, BitGo and Galaxy learned that the SEC had expressed","paragraph_id":"para_304"},{"text":"concerns about accounting practices related to the lending of digital assets, a","paragraph_id":"para_305"},{"text":"segment of the industry that represented a major part of Galaxy’s business. But the","paragraph_id":"para_306"},{"text":"SEC only raised questions at this time; it did not provide definitive answers for how","paragraph_id":"para_307"},{"text":"to resolve them.","paragraph_id":"para_308"},{"text":"BitGo urged Galaxy to seek pre-clearance from the SEC regarding these new","paragraph_id":"para_309"},{"text":"accounting issues. BitGo suggested this course of action because of Galaxy’s","paragraph_id":"para_310"},{"text":"contractual obligation both to spearhead interactions with the SEC and to use","paragraph_id":"para_311"},{"text":"commercially reasonable efforts to consummate the Reorganization and Acquisition.","paragraph_id":"para_312"},{"text":"Doing so, BitGo underscored, could have prevented progress on the parties’","paragraph_id":"para_313"},{"text":"agreement from stalling. Moreover, the uncertainty surrounding these accounting","paragraph_id":"para_314"},{"text":"issues prevented not only Galaxy but also BitGo from “even seeking consent from","paragraph_id":"para_315"},{"text":"16 Id. at A59 (emphasis omitted).","paragraph_id":"para_316"},{"text":"15","paragraph_id":"para_317"},{"text":"their respective auditors to include their audited financial statements in an Amended","paragraph_id":"para_318","court_paragraph":15},{"text":"S-4 filing.”17 Galaxy refused BitGo’s request that it seek pre-clearance, choosing","paragraph_id":"para_319"},{"text":"instead to await guidance from the American Institute of Certified Public","paragraph_id":"para_320"},{"text":"Accountants once its digital-asset working group reached consensus with the SEC.","paragraph_id":"para_321"},{"text":"Whenever BitGo would request updates on Galaxy’s progress on preparing the draft","paragraph_id":"para_322"},{"text":"amended S-4 and other transaction milestones, Galaxy deflected the inquiries,","paragraph_id":"para_323"},{"text":"providing neither a timeline nor meaningful answers.18","paragraph_id":"para_324"},{"text":"Around this time, comments from an unlikely source augured ill for BitGo in","paragraph_id":"para_325"},{"text":"the coming months. A senior Galaxy officer admitted privately to BitGo’s CEO that","paragraph_id":"para_326"},{"text":"the officer had attended meetings where Galaxy and its attorneys discussed plans to","paragraph_id":"para_327"},{"text":"exit the Amended Agreement. Galaxy would blame the unraveling of the transaction","paragraph_id":"para_328"},{"text":"on BitGo, which meant that Galaxy could walk away without paying the $100","paragraph_id":"para_329"},{"text":"million reverse termination fee.19","paragraph_id":"para_330"},{"text":"And it came to pass. At the end of July 2022, when BitGo provided to Galaxy","paragraph_id":"para_331"},{"text":"its second set of Company 2021 Audited Financial Statements—this time applying","paragraph_id":"para_332"},{"text":"SAB 121—Galaxy raised several objections to them. In August, Galaxy informed","paragraph_id":"para_333"},{"text":"BitGo that the July Submission was deficient because (i) the auditor report submitted","paragraph_id":"para_334"},{"text":"with the statements was “‘intended solely for the information and use of BitGo . . .","paragraph_id":"para_335"},{"text":"17 Id. at A62.","paragraph_id":"para_336"},{"text":"18 Id. at A61–62.","paragraph_id":"para_337"},{"text":"19 See id. at A64.","paragraph_id":"para_338"},{"text":"16","paragraph_id":"para_339"},{"text":"and Galaxy . . . ,’” which Galaxy viewed as a restriction on use that was incompatible","paragraph_id":"para_340","court_paragraph":16},{"text":"with Regulation S-X (the “Restriction on Use Legend”), and (ii) the statements were","paragraph_id":"para_341"},{"text":"audited in accordance with generally accepted auditing standards, or GAAS, rather","paragraph_id":"para_342"},{"text":"than the Public Company Accounting Oversight Board, or PCAOB, standards.20","paragraph_id":"para_343"},{"text":"As to the Restriction on Use Legend on the auditor’s report, BitGo responded","paragraph_id":"para_344"},{"text":"that, because Galaxy was nowhere close to submitting an amended S-4 to the SEC","paragraph_id":"para_345"},{"text":"(in part, a result of the uncertainty surrounding accounting guidance for digital asset","paragraph_id":"para_346"},{"text":"lending), and because the auditor’s consent could not be given until the auditor","paragraph_id":"para_347"},{"text":"reviewed the draft amended S-4, the auditor’s consent was not required at that time.","paragraph_id":"para_348"},{"text":"BitGo also maintained that the report’s language limiting its use to the parties was","paragraph_id":"para_349"},{"text":"consistent with the Amended Agreement. As to the PCAOB standards, BitGo said","paragraph_id":"para_350"},{"text":"that Galaxy knew that BitGo, a private company, had its auditor employ GAAS","paragraph_id":"para_351"},{"text":"instead of PCAOB, and Galaxy had accepted and used the Company 2020 Audited","paragraph_id":"para_352"},{"text":"Financial Statements that applied GAAS in multiple confidential submissions to the","paragraph_id":"para_353"},{"text":"SEC and the publicly filed first version of the registration statement.","paragraph_id":"para_354"},{"text":"For Galaxy, however, the purported deficiencies of the July Submission","paragraph_id":"para_355"},{"text":"sounded the death knell for the Amended Agreement. Galaxy sent BitGo a","paragraph_id":"para_356"},{"text":"termination notice on August 12, 2022, triggered by BitGo’s purported failure to","paragraph_id":"para_357"},{"text":"deliver Company 2021 Audited Financial Statements by July 31, 2022. Galaxy","paragraph_id":"para_358"},{"text":"20 Id. at A30, A65–66, A70–71.","paragraph_id":"para_359"},{"text":"17","paragraph_id":"para_360"},{"text":"trumpeted the same message publicly in a press release issued three days later,","paragraph_id":"para_361","court_paragraph":17},{"text":"declaring that “‘[n]o termination fee is payable in connection with the","paragraph_id":"para_362"},{"text":"termination.’”21 Following the press release, Novogratz claimed that Galaxy was","paragraph_id":"para_363"},{"text":"“‘still full steam ahead with the [Nasdaq] listing.’”22 But he offered no timeline for","paragraph_id":"para_364"},{"text":"when the process would be completed.","paragraph_id":"para_365"},{"text":"C","paragraph_id":"para_366"},{"text":"In September 2022, BitGo sued Galaxy in the Court of Chancery. The","paragraph_id":"para_367"},{"text":"amended complaint alleged three counts: (i) wrongful repudiation of the Amended","paragraph_id":"para_368"},{"text":"Agreement, (ii) breach of contract, and (iii) breach of the implied covenant of good","paragraph_id":"para_369"},{"text":"faith. Galaxy moved to dismiss under Court of Chancery Rule 12(b)(6) for failure","paragraph_id":"para_370"},{"text":"to state a claim upon which relief can be granted. After the parties briefed the","paragraph_id":"para_371"},{"text":"motion, the Court of Chancery held oral argument in June 2023 and then announced","paragraph_id":"para_372"},{"text":"its decision from the bench. The court dismissed the complaint and held that the","paragraph_id":"para_373"},{"text":"plain language of the Amended Agreement required BitGo to apply SAB 121 to the","paragraph_id":"para_374"},{"text":"April Submission. It reasoned that, under the definition of Company 2021 Audited","paragraph_id":"para_375"},{"text":"Financial Statements, the April Submissions had to be in a form that could actually","paragraph_id":"para_376"},{"text":"be used “for an offering of equity securities pursuant to a registration","paragraph_id":"para_377"},{"text":"statement . . . .” According to the court, BitGo’s submission was noncompliant","paragraph_id":"para_378"},{"text":"21 Id. at A72.","paragraph_id":"para_379"},{"text":"22 Id.","paragraph_id":"para_380"},{"text":"18","paragraph_id":"para_381"},{"text":"because the financial statements did not comply with SAB 121 and therefore could","paragraph_id":"para_382","court_paragraph":18},{"text":"not be used to gain registration. The alleged deficiency automatically triggered the","paragraph_id":"para_383"},{"text":"extension of the end date.","paragraph_id":"para_384"},{"text":"This result, in turn, gave rise to the possibility that a defective July Submission","paragraph_id":"para_385"},{"text":"would be grounds for termination. The court found that the July Submission was","paragraph_id":"para_386"},{"text":"defective because “the 2021 audited financial statements had a condition that limited","paragraph_id":"para_387"},{"text":"their use[,] . . . [a] condition [that] was inconsistent with Regulation S-X and [that]","paragraph_id":"para_388"},{"text":"renders them incapable of being used in a Form S-1.”23 The court’s support for this","paragraph_id":"para_389"},{"text":"conclusion was a letter that the SEC Acting Chief Accountant and Director of","paragraph_id":"para_390"},{"text":"Corporation Finance addressed to the president of the Institute of Chartered","paragraph_id":"para_391"},{"text":"Accountants of England and Wales (the “2003 Letter”). In the court’s view, the July","paragraph_id":"para_392"},{"text":"Submission failed to observe the 2003 Letter’s instruction that “‘[i]n no","paragraph_id":"para_393"},{"text":"circumstances, . . . should an audit opinion containing restrictions, such as the UK","paragraph_id":"para_394"},{"text":"form of audit opinion, be included as part of, or incorporated into, the annual report","paragraph_id":"para_395"},{"text":"on Form 20-F or any other report filed with the Commission.’”24 The court opined","paragraph_id":"para_396"},{"text":"23 Opening Br. Ex. A (“Tr. Ruling”) at 76.","paragraph_id":"para_397"},{"text":"24 Tr. Ruling at 84; see also App. to Opening Br. at A860–61.","paragraph_id":"para_398"},{"text":"19","paragraph_id":"para_399"},{"text":"that the 2003 Letter created a requirement under Regulation S-X.25 And the July","paragraph_id":"para_400","court_paragraph":19},{"text":"Submission’s noncompliance with this requirement, according to the court, provided","paragraph_id":"para_401"},{"text":"Galaxy with a “clean contractual basis for termination” that swallowed up all three","paragraph_id":"para_402"},{"text":"counts of the complaint.26 The court entered final judgment in favor of Galaxy that","paragraph_id":"para_403"},{"text":"same day.","paragraph_id":"para_404"},{"text":"D","paragraph_id":"para_405"},{"text":"On appeal, BitGo argues that the Court of Chancery erred by (i) holding that","paragraph_id":"para_406"},{"text":"BitGo’s April Submission did not meet the definition of Company 2021 Audited","paragraph_id":"para_407"},{"text":"Financial Statements because they did not apply SAB 121, (ii) holding that BitGo’s","paragraph_id":"para_408"},{"text":"July Submission failed to meet the definition of Company 2021 Audited Financial","paragraph_id":"para_409"},{"text":"Statements based on the auditor’s language restricting the use of its report, and","paragraph_id":"para_410"},{"text":"(iii) dismissing BitGo’s claims based on Galaxy’s breach of the Amended","paragraph_id":"para_411"},{"text":"Agreement, which required Galaxy to use commercially reasonable efforts to resolve","paragraph_id":"para_412"},{"text":"issues related to the lending of digital assets, which breach BitGo urges was the","paragraph_id":"para_413"},{"text":"25 See, e.g., Tr. Ruling at 82–85. After reading the foregoing passage from the 2003 Letter, the","paragraph_id":"para_414"},{"text":"court stated, “[t]hat is about as clear a statement of policy on this issue as you can get.” Id. at 84.","paragraph_id":"para_415"},{"text":"The court then rejected BitGo’s argument that the letter was not “part of Regulation S-X[.]” Id.","paragraph_id":"para_416"},{"text":"Instead, the court said that “[w]hen you have clear guidance from the SEC about something that is","paragraph_id":"para_417"},{"text":"absolutely not permitted in any filing with the SEC, it is clear that a set of financial statements","paragraph_id":"para_418"},{"text":"containing that restriction would not comply with the requirements of Regulation S-X for an","paragraph_id":"para_419"},{"text":"offering of equity securities pursuant to a registration statement on form S-1 for a nonreporting","paragraph_id":"para_420"},{"text":"company.” Thus, the court seems to have treated the 2003 Letter as a requirement of Regulation","paragraph_id":"para_421"},{"text":"S-X. See id. at 82–85.","paragraph_id":"para_422"},{"text":"26 Id. at 76.","paragraph_id":"para_423"},{"text":"20","paragraph_id":"para_424"},{"text":"origin of the Restriction on Use Legend. BitGo did not appeal the dismissal of its","paragraph_id":"para_425","court_paragraph":20},{"text":"third and final count, which alleges a breach of the implied covenant of good faith.","paragraph_id":"para_426"},{"text":"Galaxy responds that the Court of Chancery was correct, as a matter of law,","paragraph_id":"para_427"},{"text":"that SAB 121 applied to the April Submission. In support of this position, Galaxy","paragraph_id":"para_428"},{"text":"contends that SAB 121’s express language makes clear that it applies to entities such","paragraph_id":"para_429"},{"text":"as BitGo and dovetails with the definition of Company 2021 Audited Financial","paragraph_id":"para_430"},{"text":"Statements. Galaxy also points to BitGo’s alleged concession in the April","paragraph_id":"para_431"},{"text":"Submission that the application of SAB 121 was required and the July Submission’s","paragraph_id":"para_432"},{"text":"actual application of SAB 121 as evidence that undercuts BitGo’s appeal.","paragraph_id":"para_433"},{"text":"Galaxy also defends the Court of Chancery’s conclusion that the Restriction","paragraph_id":"para_434"},{"text":"on Use Legend in the July version of BitGo’s financial statements rendered them","paragraph_id":"para_435"},{"text":"noncompliant with the contractual definition of Company 2021 Audited Financial","paragraph_id":"para_436"},{"text":"Statements. Thus, according to Galaxy, the trial court did not err when it found that","paragraph_id":"para_437"},{"text":"Galaxy validly terminated the Amended Agreement.","paragraph_id":"para_438"},{"text":"Because we have concluded that the Amended Agreement’s language","paragraph_id":"para_439"},{"text":"governing BitGo’s April and July Submissions is ambiguous, we focus the balance","paragraph_id":"para_440"},{"text":"of our discussion on that issue.","paragraph_id":"para_441"},{"text":"21","paragraph_id":"para_442"},{"text":"II","paragraph_id":"para_443","court_paragraph":21},{"text":"A","paragraph_id":"para_444"},{"text":"We review the Court of Chancery’s grant of a motion to dismiss de novo,27","paragraph_id":"para_445"},{"text":"which means that we","paragraph_id":"para_446"},{"text":"‘(1) accept all well pleaded factual allegations as true, (2) accept even","paragraph_id":"para_447"},{"text":"vague allegations as ‘well pleaded’ if they give the opposing party","paragraph_id":"para_448"},{"text":"notice of the claim, (3) draw all reasonable inferences in favor of the","paragraph_id":"para_449"},{"text":"non-moving party, and (4) do not affirm a dismissal unless the plaintiff","paragraph_id":"para_450"},{"text":"would not be entitled to recover under any reasonably conceivable set","paragraph_id":"para_451"},{"text":"of circumstances.’28","paragraph_id":"para_452"},{"text":"Moreover, “whether a contract is unambiguous is a question of law[.]”29 Questions","paragraph_id":"para_453"},{"text":"of contract construction are reviewed de novo.30","paragraph_id":"para_454"},{"text":"The basic principles that guide us when we review a trial court’s interpretation","paragraph_id":"para_455"},{"text":"of a contract are well settled. “When interpreting a contract, Delaware courts read","paragraph_id":"para_456"},{"text":"the agreement as a whole and enforce the plain meaning of clear and unambiguous","paragraph_id":"para_457"},{"text":"language.”31 “‘Delaware law adheres to the objective theory of contracts, i.e., a","paragraph_id":"para_458"},{"text":"contract’s construction should be that which would be understood by an objective,","paragraph_id":"para_459"},{"text":"reasonable third party.’”32 “‘The true test is not what the parties to the contract","paragraph_id":"para_460"},{"text":"intended it to mean, but what a reasonable person in the position of the parties would","paragraph_id":"para_461"},{"text":"27 In re GGP, Inc. S’holder Litig., 282 A.3d 37, 54 (Del. 2022).","paragraph_id":"para_462"},{"text":"28 Id. (citation omitted).","paragraph_id":"para_463"},{"text":"29 Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 847, 847 n.68 (Del.","paragraph_id":"para_464"},{"text":"2019).","paragraph_id":"para_465"},{"text":"30 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010).","paragraph_id":"para_466"},{"text":"31 Manti Holdings, LLC v. Authentix Acquisition Co, Inc., 261 A.3d 1199, 1208 (Del. 2021).","paragraph_id":"para_467"},{"text":"32 Salamone v. Gorman, 106 A.3d 354, 367–68 (Del. 2014) (citing Osborn, 991 A.2d at 1159).","paragraph_id":"para_468"},{"text":"22","paragraph_id":"para_469"},{"text":"have thought it meant.’”33 If a contract is “plain and clear on its face, i.e., its","paragraph_id":"para_470","court_paragraph":22},{"text":"language conveys an unmistakable meaning, the writing itself is the sole source for","paragraph_id":"para_471"},{"text":"gaining an understanding of intent.”34 Stated differently, clear and unambiguous","paragraph_id":"para_472"},{"text":"language is “reasonably susceptible of only one interpretation.”35 Language from a","paragraph_id":"para_473"},{"text":"contract need not be perfectly clear for an interpretation of it to be deemed as the","paragraph_id":"para_474"},{"text":"only reasonable one.36","paragraph_id":"para_475"},{"text":"An “interpretation that conflicts with the plain language of a contract is not","paragraph_id":"para_476"},{"text":"reasonable[,]”37 but an interpretation can be at once both “reasonable, though","paragraph_id":"para_477"},{"text":"problematic[.]”38 Accordingly, “although the ‘more natural[]’ reading is a factor to","paragraph_id":"para_478"},{"text":"be considered, it does not conclude the analysis. Even a ‘less natural’ reading of a","paragraph_id":"para_479"},{"text":"contract term may be ‘reasonable’ for purposes of an ambiguity inquiry.”39","paragraph_id":"para_480"},{"text":"A provision in a contract is ambiguous “when the provision in controversy is","paragraph_id":"para_481"},{"text":"reasonably or fairly susceptible of different interpretations or may have two or more","paragraph_id":"para_482"},{"text":"different meanings.”40 “[I]f the words of the agreement ‘can only be known through","paragraph_id":"para_483"},{"text":"an appreciation of the context and circumstances in which they were used’” at the","paragraph_id":"para_484"},{"text":"33 Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006) (citing Rhone-","paragraph_id":"para_485"},{"text":"Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992)).","paragraph_id":"para_486"},{"text":"34 City Inv. Co. Liquidating Tr. v. Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993).","paragraph_id":"para_487"},{"text":"35 Rhone-Poulenc, 616 A.2d at 1196 (emphasis added).","paragraph_id":"para_488"},{"text":"36 See Hercules, Inc. v. AIU Ins. Co., 784 A.2d 481, 506 (Del. 2001).","paragraph_id":"para_489"},{"text":"37 Bank of New York Mellon v. Commerzbank Cap. Funding Tr. II, 65 A.3d 539, 555 (Del. 2013).","paragraph_id":"para_490"},{"text":"38 Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127, 130 (Del. 1997).","paragraph_id":"para_491"},{"text":"39 Bank of New York Mellon, 65 A.3d at 550.","paragraph_id":"para_492"},{"text":"40 Rhone-Poulenc, 616 A.2d at 1196.","paragraph_id":"para_493"},{"text":"23","paragraph_id":"para_494"},{"text":"time of drafting, then the language is ambiguous, such that “a court is not free to","paragraph_id":"para_495","court_paragraph":23},{"text":"disregard extrinsic evidence of what the parties intended.”41 It is also true that we","paragraph_id":"para_496"},{"text":"“do not consider extrinsic evidence unless we find that the text is ambiguous.”42","paragraph_id":"para_497"},{"text":"Extrinsic evidence may not to be used to “create an ambiguity.”43 Finally—and","paragraph_id":"para_498"},{"text":"importantly for present purposes—“[d]ismissal is proper only if the defendants’","paragraph_id":"para_499"},{"text":"interpretation is the only reasonable construction as a matter of law.”44","paragraph_id":"para_500"},{"text":"B","paragraph_id":"para_501"},{"text":"We begin with a review of the crucial contractual definition of “Company","paragraph_id":"para_502"},{"text":"2021 Audited Financial Statements” and the Court of Chancery’s conclusion that the","paragraph_id":"para_503"},{"text":"April Submission did not measure up to it. This exercise is, in the court’s words,","paragraph_id":"para_504"},{"text":"“important because if Galaxy wrongfully rejected the April version of the financial","paragraph_id":"para_505"},{"text":"statements, then the end date would not extend, and the termination right on which","paragraph_id":"para_506"},{"text":"Galaxy relied would not be available.”45","paragraph_id":"para_507"},{"text":"The definition of “Company 2021 Audited Financial Statements,” which we","paragraph_id":"para_508"},{"text":"quoted earlier in full,46 includes the requirement that the statements be “prepared . . .","paragraph_id":"para_509"},{"text":"41 See City Inv., 624 A.2d at 1198.","paragraph_id":"para_510"},{"text":"42 Samuel J. Heyman 1981 Continuing Tr. For Lazarus S. Heyman v. Ashland LLC, 284 A.3d 714,","paragraph_id":"para_511"},{"text":"721 (Del. 2022).","paragraph_id":"para_512"},{"text":"43 See Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).","paragraph_id":"para_513"},{"text":"44 Vanderbilt Income and Growth Assocs., L.L.C. v. Arvida/JMB Managers, Inc., 691 A.2d 609,","paragraph_id":"para_514"},{"text":"613 (Del. 1996) (emphasis in original) (citations omitted) (observing that “[o]n a motion to dismiss","paragraph_id":"para_515"},{"text":"for failure to state a claim, a trial court cannot choose between two differing reasonable","paragraph_id":"para_516"},{"text":"interpretations of ambiguous documents.”).","paragraph_id":"para_517"},{"text":"45 Tr. Ruling at 76–77.","paragraph_id":"para_518"},{"text":"46 See supra p. 8.","paragraph_id":"para_519"},{"text":"24","paragraph_id":"para_520"},{"text":"in a form that complies with the requirements of Regulation S-X for an offering of","paragraph_id":"para_521","court_paragraph":24},{"text":"equity securities pursuant to a registration statement on Form S-1 for a non-reporting","paragraph_id":"para_522"},{"text":"company . . . .”47 Because the definition does not expressly mention SAB 121, its","paragraph_id":"para_523"},{"text":"inclusion must hinge on whether its application to BitGo’s financial statements when","paragraph_id":"para_524"},{"text":"they were submitted on April 29, 2022 was a requirement on that date. Under","paragraph_id":"para_525"},{"text":"BitGo’s interpretation, it was not.","paragraph_id":"para_526"},{"text":"BitGo’s interpretation finds support in the explicit interpretative guidance the","paragraph_id":"para_527"},{"text":"Amended Agreement itself provides. Specifically, § 1.02 of the Amended","paragraph_id":"para_528"},{"text":"Agreement, titled “Other Definitional and Interpretative Provisions,” explains that","paragraph_id":"para_529"},{"text":"“[r]eferences to any statute, rule, regulation, law or Applicable Law shall be deemed","paragraph_id":"para_530"},{"text":"to refer to such statute, rule, regulation, law or Applicable Law as amended or","paragraph_id":"para_531"},{"text":"supplemented from time to time and to any rules, regulations and interpretations","paragraph_id":"para_532"},{"text":"promulgated thereunder.”48 Taken together, § 1.02 and the definition of Company","paragraph_id":"para_533"},{"text":"2021 Audited Financial Statements expand the scope of “requirements of Regulation","paragraph_id":"para_534"},{"text":"S-X” to include compliance with any “rules, regulations, and interpretations","paragraph_id":"para_535"},{"text":"promulgated thereunder.” Neither the Court of Chancery nor Galaxy disagree that","paragraph_id":"para_536"},{"text":"§ 1.02 applies here—but neither considered how § 1.02 relates to the definition of","paragraph_id":"para_537"},{"text":"Company 2021 Audited Financial Statements.","paragraph_id":"para_538"},{"text":"47 App. to Opening Br. at A100–01.","paragraph_id":"para_539"},{"text":"48 Id. at A129 (emphasis added).","paragraph_id":"para_540"},{"text":"25","paragraph_id":"para_541"},{"text":"BitGo does not contest that the Company 2021 Audited Financial Statements","paragraph_id":"para_542","court_paragraph":25},{"text":"must comply with Regulation S-X and interpretations promulgated thereunder. It","paragraph_id":"para_543"},{"text":"posits that the dispositive question is whether SAB 121 is an “interpretation[]","paragraph_id":"para_544"},{"text":"promulgated under Regulation S-X.”49 BitGo argues that it is not for three reasons.","paragraph_id":"para_545"},{"text":"First, BitGo notes that SAB 121 does not mention Regulation S-X or purport","paragraph_id":"para_546"},{"text":"to interpret its text. On this point, BitGo cites staff accounting bulletins that actually","paragraph_id":"para_547"},{"text":"purport to interpret Regulation S-X, which make specific reference to it.50 BitGo","paragraph_id":"para_548"},{"text":"next observes that Regulation S-X does not provide for the promulgation of staff","paragraph_id":"para_549"},{"text":"accounting bulletins and that “nothing in SAB 121 indicates it was an interpretation","paragraph_id":"para_550"},{"text":"promulgated under Regulation S-X.”51 Finally, BitGo contends that, because SAB","paragraph_id":"para_551"},{"text":"121 “has no force of law,” it was not “promulgated at all,”52 within the plain meaning","paragraph_id":"para_552"},{"text":"of that word. Importantly, BitGo notes that the text of SAB 121 itself clarifies that","paragraph_id":"para_553"},{"text":"the guidance it provides does not constitute “rules or interpretations of the","paragraph_id":"para_554"},{"text":"Commission, nor [is it] published as bearing the Commission’s official approval.”53","paragraph_id":"para_555"},{"text":"49 Id.","paragraph_id":"para_556"},{"text":"50 See, e.g., id. at A857, Staff Accounting Bulletin No. 69 (May 8, 1987) (expressing staff views","paragraph_id":"para_557"},{"text":"regarding “[t]he use of Article 9 of Regulation S-X”); id. at A853, Staff Accounting Bulletin No.","paragraph_id":"para_558"},{"text":"53 (June 13, 1983) (“express[ing] the staff’s views with respect to certain disclosure and reporting","paragraph_id":"para_559"},{"text":"requirements relating to the issuance of securities guaranteed by affiliates of the issuer and to Rule","paragraph_id":"para_560"},{"text":"3-10 of Regulation S-X”) (cited at Opening Br. 27–28).","paragraph_id":"para_561"},{"text":"51 Opening Br. at 28.","paragraph_id":"para_562"},{"text":"52 Id.","paragraph_id":"para_563"},{"text":"53 App. to Opening Br. at 804.","paragraph_id":"para_564"},{"text":"26","paragraph_id":"para_565"},{"text":"Galaxy’s response to these contentions focuses on whether SAB 121 is an","paragraph_id":"para_566","court_paragraph":26},{"text":"“interpretation” that is applicable to entities like BitGo. Galaxy chides BitGo, for","paragraph_id":"para_567"},{"text":"instance, for ignoring “that SAB 121 states that it provides ‘interpretations’","paragraph_id":"para_568"},{"text":"applicable to the financial statements of companies charged with safeguarding","paragraph_id":"para_569"},{"text":"crypto assets (like BitGo) . . . .”54 Galaxy also cites authority for the proposition that","paragraph_id":"para_570"},{"text":"courts accept staff accounting bulletins as “‘interpretations and practices’” followed","paragraph_id":"para_571"},{"text":"by the SEC.55 And Galaxy takes issue with BitGo’s understanding of what it means","paragraph_id":"para_572"},{"text":"to “promulgate” an interpretation. But Galaxy never squarely addresses whether","paragraph_id":"para_573"},{"text":"SAB 121 was an “interpretation promulgated under” Regulation S-X.","paragraph_id":"para_574"},{"text":"Instead of focusing on § 1.02 and its interpretative guidance, the Court of","paragraph_id":"para_575"},{"text":"Chancery relied on the language from the definition of Company 2021 Audited","paragraph_id":"para_576"},{"text":"Financial Statements. According to the court, the issue was whether the April","paragraph_id":"para_577"},{"text":"Submission was in a form that could actually be filed with the SEC. The court found","paragraph_id":"para_578"},{"text":"that it was not because SAB 121 had to be applied in the “next submission or filing","paragraph_id":"para_579"},{"text":"with the SEC,”56 which, according to the court, was “the contemplated S-1.”57","paragraph_id":"para_580"},{"text":"54 Answering Br. at 22.","paragraph_id":"para_581"},{"text":"55 Id. at 23 (citing Ginano v. Citizens Utils. Co., 228 F.3d. 154, 163 (2d Cir. 2000)).","paragraph_id":"para_582"},{"text":"56 App. to Opening Br. at 808 (SAB 121 states that “the staff expects . . . entities . . . to apply the","paragraph_id":"para_583"},{"text":"guidance . . . beginning with their next submission or filing with the SEC (e.g., the initial or next","paragraph_id":"para_584"},{"text":"amendment of the registration statement, proxy statement, or Form 1-A), with retrospective","paragraph_id":"para_585"},{"text":"application, at a minimum, as of the beginning of the most recent annual period ending before June","paragraph_id":"para_586"},{"text":"15, 2022 . . . .”).","paragraph_id":"para_587"},{"text":"57 Tr. Ruling at 79. We note here that, although the Court of Chancery described the parties’ next","paragraph_id":"para_588"},{"text":"filing with the SEC as “the contemplated S-1,” the amended complaint asserts that the parties’ next","paragraph_id":"para_589"},{"text":"contemplated SEC filing was an amended S-4: “Galaxy continued to emphasize that its only","paragraph_id":"para_590"},{"text":"27","paragraph_id":"para_591"},{"text":"The court also considered the Amended Agreement’s definition of","paragraph_id":"para_592","court_paragraph":27},{"text":"“Applicable Law.” The court recognized that the “Applicable Law” provision was","paragraph_id":"para_593"},{"text":"not “directly applicable”58 to the definition, but that it nevertheless provided a","paragraph_id":"para_594"},{"text":"“signal . . . that when there is a law to be complied with, the obligation extends not","paragraph_id":"para_595"},{"text":"only to the regulations themselves but also to interpretations like SAB 121.”59 And","paragraph_id":"para_596"},{"text":"finally, the court relied on “the financial statements self-acknowledge[ment] in the","paragraph_id":"para_597"},{"text":"notes that there is a need to comply with SAB 121”60 and the adherence to SAB","paragraph_id":"para_598"},{"text":"121’s guidance in BitGo’s July Submission. We take up these reasons for the Court","paragraph_id":"para_599"},{"text":"of Chancery’s conclusion in turn.","paragraph_id":"para_600"},{"text":"concern was that BitGo should retrospectively apply SAB 121 to assist Galaxy and HoldCo’s","paragraph_id":"para_601"},{"text":"eventual filing of the Amended S-4. The parties’ understanding was that Galaxy and HoldCo","paragraph_id":"para_602"},{"text":"would not file on Form S-1.” App. to Opening Br. at A53–54. As best we can discern, neither","paragraph_id":"para_603"},{"text":"party has challenged this assertion.","paragraph_id":"para_604"},{"text":"58 Tr. Ruling at 79–80. The court’s invocation of the “Applicable Law” provision and our","paragraph_id":"para_605"},{"text":"characterization of it is reflected in the following passage from the court transcript ruling: “Galaxy","paragraph_id":"para_606"},{"text":"has also invoked to its aid Section 1.02 and the definition of ‘Applicable Law.’ I don’t think that","paragraph_id":"para_607"},{"text":"provision is directly applicable. The definition of “Applicable Law” is just that, a defined term,","paragraph_id":"para_608"},{"text":"‘Applicable Law.’ The definition of ‘Company Financial Statements’ doesn’t say ‘compliance","paragraph_id":"para_609"},{"text":"with the requirements of Applicable Law.’ It specifically says ‘compliance with the requirements","paragraph_id":"para_610"},{"text":"of Regulation S-X.’ ‘Applicable Law’ is used in other sections of the agreement, most notably in","paragraph_id":"para_611"},{"text":"the representation that the company is, in fact, in compliance with Applicable Law. But","paragraph_id":"para_612"},{"text":"‘Applicable Law’ is not directly implicated in the definition of ‘Company 2021 Audited Financial","paragraph_id":"para_613"},{"text":"Statements.’ It is, however, a signal as to what people thought compliance meant. And what that","paragraph_id":"para_614"},{"text":"definition indicates is that is when there is a law to be complied with, the obligation extends not","paragraph_id":"para_615"},{"text":"only to the regulations themselves but also to interpretations like SAB 121.” (emphasis added).","paragraph_id":"para_616"},{"text":"59 Id. at 80.","paragraph_id":"para_617"},{"text":"60 Id.","paragraph_id":"para_618"},{"text":"28","paragraph_id":"para_619"},{"text":"C","paragraph_id":"para_620","court_paragraph":28},{"text":"We see the timing issue—that is, the applicability of SAB 121 to BitGo’s","paragraph_id":"para_621"},{"text":"financial statements as of April 30, 2022—as decisive. The question, in our view, is","paragraph_id":"para_622"},{"text":"not whether BitGo would ultimately be required to apply SAB 121’s guidance to the","paragraph_id":"para_623"},{"text":"Company 2021 Audited Financial Statements in its next submission or filing with","paragraph_id":"para_624"},{"text":"the SEC, the contemplated filing of which was months away. Rather, the relevant","paragraph_id":"para_625"},{"text":"question is whether, on April 30, 2022—the deadline for the April Submission—the","paragraph_id":"para_626"},{"text":"financial statements were “in a form that complies with the requirements of","paragraph_id":"para_627"},{"text":"Regulation S-X for an offering of equity securities pursuant to a registration","paragraph_id":"para_628"},{"text":"statement on Form S-1 for a non-reporting company[.]”61 And a finding that the","paragraph_id":"para_629"},{"text":"April Submission met the definition as of the deadline would be dispositive here","paragraph_id":"para_630"},{"text":"because Galaxy’s assertion that BitGo’s submission “d[id] not meet the definition of","paragraph_id":"para_631"},{"text":"[Company 2021] Audited Financial Statements” was the sole basis for its rejection","paragraph_id":"para_632"},{"text":"of the statements62 without which Galaxy’s termination right would not have","paragraph_id":"para_633"},{"text":"arisen.63","paragraph_id":"para_634"},{"text":"61 App. to Opening Br. at A100–01.","paragraph_id":"para_635"},{"text":"62 Id. at A699.","paragraph_id":"para_636"},{"text":"63 Galaxy concedes as much on appeal. Delaware Supreme Court, Oral Argument Video: BitGo","paragraph_id":"para_637"},{"text":"Holdings, Inc. v. Galaxy Digital Holdings Ltd., at 31:40–32:40 (Dec. 6, 2023)","paragraph_id":"para_638"},{"text":"(https://vimeo.com/891912984) (Galaxy’s admission that if the April Submission was compliant,","paragraph_id":"para_639"},{"text":"“everything else falls away, and I think we’re back into the Chancery Court”). Both the Court of","paragraph_id":"para_640"},{"text":"Chancery and Galaxy also agreed on this point at oral argument on Galaxy’s motion to dismiss.","paragraph_id":"para_641"},{"text":"See Tr. Ruling at 33–34; 76–77. There, the court asked Galaxy’s counsel to assume that Galaxy","paragraph_id":"para_642"},{"text":"“incorrectly asserted that SAB 121 applies . . . [and] in fact, the Company 2021 Audited Financial","paragraph_id":"para_643"},{"text":"Statements were contractually compliant,” and to “take [the court] through what happens if that’s","paragraph_id":"para_644"},{"text":"29","paragraph_id":"para_645"},{"text":"As mentioned, the Court of Chancery focused on the SEC guidance that BitGo","paragraph_id":"para_646","court_paragraph":29},{"text":"might be required to follow in its next submission or filing of financial statements","paragraph_id":"para_647"},{"text":"with the SEC. In essence, the court read the relevant definition as requiring BitGo","paragraph_id":"para_648"},{"text":"to submit “file-ready” statements by April 30, 2022, even though the next filing was","paragraph_id":"para_649"},{"text":"months in the future at a time when the questions of SAB 121’s applicability and the","paragraph_id":"para_650"},{"text":"SEC’s position on accounting practices related to the lending of digital assets were","paragraph_id":"para_651"},{"text":"subject to uncertainty. In reaching this conclusion, however, the court did not","paragraph_id":"para_652"},{"text":"address § 1.02’s interpretative guidance.","paragraph_id":"para_653"},{"text":"On appeal, the parties joined issue over § 1.02 and whether SAB 121 was","paragraph_id":"para_654"},{"text":"“promulgated” as that word is used in § 1.02 of the Amended Agreement. BitGo","paragraph_id":"para_655"},{"text":"favors a narrow definition that involves an administrative agency’s “‘formal process","paragraph_id":"para_656"},{"text":"of rulemaking by publishing the proposed regulation, inviting public comments, and","paragraph_id":"para_657"},{"text":"approving or rejecting the proposal.’”64 Galaxy, on the other hand, favors a broader","paragraph_id":"para_658"},{"text":"definition that simply refers to the SEC’s ability to “‘declare or announce publicly;","paragraph_id":"para_659"},{"text":"to proclaim[.]’”65 If BitGo’s preferred definition applies, then it would seem that","paragraph_id":"para_660"},{"text":"SAB 121 was not “promulgated.” Conversely, SAB 121 was declared and","paragraph_id":"para_661"},{"text":"announced publicly and therefore “promulgated” under Galaxy’s definition. On this","paragraph_id":"para_662"},{"text":"the case” to which Galaxy’s counsel replied, “if [BitGo] deliver[ed] contractually compliant","paragraph_id":"para_663"},{"text":"financial statements as of April 30, 2022, [Galaxy] ha[d] an obligation to move forward[.]”","paragraph_id":"para_664"},{"text":"64 Opening Br. at 29–30 (citing Promulgate, Black’s Law Dictionary (9th ed. 2009)).","paragraph_id":"para_665"},{"text":"65 Answering Br. at 25 n.5 (citing Promulgate, Black’s Law Dictionary (11th ed. 2019)).","paragraph_id":"para_666"},{"text":"30","paragraph_id":"para_667"},{"text":"pleading-stage record and without the benefit of any guidance as to the word’s","paragraph_id":"para_668","court_paragraph":30},{"text":"accepted meaning in the world of securities regulation, we are not prepared to say","paragraph_id":"para_669"},{"text":"that either of these definitions is unreasonable.","paragraph_id":"para_670"},{"text":"Under its proffered definition of “promulgate,” BitGo argues that nothing in","paragraph_id":"para_671"},{"text":"SAB 121 suggests that it was required by or promulgated under Regulation S-X. In","paragraph_id":"para_672"},{"text":"fact, SAB 121’s text does not even mention Regulation S-X, though it refers to other","paragraph_id":"para_673"},{"text":"SEC regulations, such as Regulation A and Regulation S-K. What is more, BitGo","paragraph_id":"para_674"},{"text":"argues, the text of SAB 121 expressly disclaims that it provides officially sanctioned","paragraph_id":"para_675"},{"text":"interpretative guidance. The Bulletin says,","paragraph_id":"para_676"},{"text":"statements in staff accounting bulletins are not rules or interpretations","paragraph_id":"para_677"},{"text":"of the Commission, nor are they published as bearing the Commission’s","paragraph_id":"para_678"},{"text":"official approval. They represent staff interpretations and practices","paragraph_id":"para_679"},{"text":"followed by the staff in the Division of Corporation Finance and the","paragraph_id":"para_680"},{"text":"Office of the Chief Accountant in administering the disclosure","paragraph_id":"para_681"},{"text":"requirements of the federal securities laws.66","paragraph_id":"para_682"},{"text":"This disclaimer, together with the absence of any reference to Regulation S-X in","paragraph_id":"para_683"},{"text":"SAB 121, leads BitGo to conclude that SAB 121 was not promulgated under","paragraph_id":"para_684"},{"text":"Regulation S-X.","paragraph_id":"para_685"},{"text":"Alternatively, BitGo argues that, even if SAB 121 was promulgated under","paragraph_id":"para_686"},{"text":"Regulation S-X, the Bulletin’s own terms did not expressly require BitGo to apply","paragraph_id":"para_687"},{"text":"66 App. to Opening Br. at A804.","paragraph_id":"para_688"},{"text":"31","paragraph_id":"para_689"},{"text":"its guidance in April 2022. The relevant language from SAB 121 reflects the","paragraph_id":"para_690","court_paragraph":31},{"text":"expectation that entities will apply its guidance","paragraph_id":"para_691"},{"text":"beginning with their next submission or filing with the SEC (e.g. the","paragraph_id":"para_692"},{"text":"initial or next amendment of the registration statement, proxy","paragraph_id":"para_693"},{"text":"statement, or Form 1-A), with retrospective application, at a minimum,","paragraph_id":"para_694"},{"text":"as of the beginning of the most recent annual period ending before June","paragraph_id":"para_695"},{"text":"15, 2022 . . . .”67","paragraph_id":"para_696"},{"text":"BitGo homes in on the phrase “retrospective application,” describing it as an","paragraph_id":"para_697"},{"text":"“esoteric accounting practice[]” or “a term of art[.]”68 In BitGo’s view, the meaning","paragraph_id":"para_698"},{"text":"of this term presented a factual question that the court mistakenly decided without","paragraph_id":"para_699"},{"text":"the benefit of expert testimony, requiring the April Submission to apply SAB 121","paragraph_id":"para_700"},{"text":"“contemporaneously, not retrospectively.”69","paragraph_id":"para_701"},{"text":"But as BitGo tells it, “retrospective application” is a term that “refers to ‘the","paragraph_id":"para_702"},{"text":"application of a different accounting principle to one or more previously issued","paragraph_id":"para_703"},{"text":"financial statements.’”70 BitGo asserts that the April Submission was properly","paragraph_id":"para_704"},{"text":"prepared based on the accounting guidance applicable at the end of BitGo’s fiscal","paragraph_id":"para_705"},{"text":"year; whatever adjustments SAB 121 required “would be ‘retrospectively adjusted","paragraph_id":"para_706"},{"text":"in the future as a result of the change.’”71 Had the court appreciated the distinction,","paragraph_id":"para_707"},{"text":"BitGo suggests, the court would not have “effectively reject[ed] [BitGo’s auditor’s]","paragraph_id":"para_708"},{"text":"67 Id. at A808; see Opening Br. at 31.","paragraph_id":"para_709"},{"text":"68 Opening Br. at 31–32.","paragraph_id":"para_710"},{"text":"69 Id. (emphasis in original).","paragraph_id":"para_711"},{"text":"70 Id. (emphasis in original) (citing App. to Opening Br. at A850, ASC Topic 250-20).","paragraph_id":"para_712"},{"text":"71 Id. at 32 (emphasis in original) (citing SEC Staff Accounting Bulletin Codification Topic 11.M).","paragraph_id":"para_713"},{"text":"32","paragraph_id":"para_714"},{"text":"understanding of the applicable accounting standards as a matter of law.”72 BitGo","paragraph_id":"para_715","court_paragraph":32},{"text":"further claims that, under the Amended Agreement, § 13.01’s “text and","paragraph_id":"para_716"},{"text":"structure . . . embed[] the distinction between retrospective application and a prior-","paragraph_id":"para_717"},{"text":"period restatement[,]” such that the agreement allowed for the former but not the","paragraph_id":"para_718"},{"text":"latter.73","paragraph_id":"para_719"},{"text":"In answer to BitGo’s primary argument that SAB 121 was wholly","paragraph_id":"para_720"},{"text":"inapplicable, Galaxy builds on the Court of Chancery’s view that the definition of","paragraph_id":"para_721"},{"text":"Company 2021 Audited Financial Statements calls for “file-ready” statements. That","paragraph_id":"para_722"},{"text":"is, Galaxy emphasizes that BitGo’s statements were to be “in a form that complies","paragraph_id":"para_723"},{"text":"with the requirements of Regulation S-X for an offering of equity securities pursuant","paragraph_id":"para_724"},{"text":"to a registration statement on Form S-1 for a non-reporting company[.]”74","paragraph_id":"para_725"},{"text":"Combining this language with language from § 9.07 of the Amended Agreement,75","paragraph_id":"para_726"},{"text":"Galaxy avers that BitGo’s financial statements “had to be in a form that could","paragraph_id":"para_727"},{"text":"actually be filed with—and accepted by—the SEC as part of Galaxy’s forthcoming","paragraph_id":"para_728"},{"text":"registration statement.”76","paragraph_id":"para_729"},{"text":"72 See id. at 34.","paragraph_id":"para_730"},{"text":"73 Id. at 33–34 (citing § 13.01(b), (h)).","paragraph_id":"para_731"},{"text":"74 App. to Opening Br. at 100–01; Answering Br. at 17–18.","paragraph_id":"para_732"},{"text":"75 App. to Opening Br. at A218. Under § 9.07, BitGo’s submissions to Galaxy were “required to","paragraph_id":"para_733"},{"text":"be included in the [registration statement] under the Securities Act and the rules and regulations","paragraph_id":"para_734"},{"text":"promulgated thereunder in order for any such registration statement to be declared effective by the","paragraph_id":"para_735"},{"text":"SEC.” Id.","paragraph_id":"para_736"},{"text":"76 Answering Br. at 18.","paragraph_id":"para_737"},{"text":"33","paragraph_id":"para_738"},{"text":"Galaxy then ties SAB 121 to Regulation S-X in three steps. First, Galaxy","paragraph_id":"para_739","court_paragraph":33},{"text":"argues that Regulation S-X “governs the form, content, and requirements of financial","paragraph_id":"para_740"},{"text":"statements filed with registration statements.”77 Second, Galaxy points to SAB","paragraph_id":"para_741"},{"text":"121’s language stating that it offers “interpretive guidance for entities to consider","paragraph_id":"para_742"},{"text":"when they have obligations to safeguard crypto-assets held for their platform uses,”","paragraph_id":"para_743"},{"text":"such that it applies, among others, to “private operating companies whose financial","paragraph_id":"para_744"},{"text":"statements are included in filings with the SEC in connection with a business","paragraph_id":"para_745"},{"text":"combination[.]”78 And third, Galaxy concludes that BitGo and the Acquisition fall","paragraph_id":"para_746"},{"text":"within the scope of SAB 121. Hence, Galaxy holds out that the definition of","paragraph_id":"para_747"},{"text":"Company 2021 Audited Financial Statements required BitGo to apply SAB 121.","paragraph_id":"para_748"},{"text":"Responding to BitGo’s alternative argument, Galaxy defends the court’s","paragraph_id":"para_749"},{"text":"interpretation of what it calls SAB 121’s “plain language” that required BitGo to","paragraph_id":"para_750"},{"text":"apply SAB 121’s guidance to the April Submission, concluding that expert","paragraph_id":"para_751"},{"text":"testimony was unnecessary.79 Galaxy also maintains that § 13.01 is inapplicable, as","paragraph_id":"para_752"},{"text":"it relates only to scenarios arising after BitGo’s April or July Submissions (and even","paragraph_id":"para_753"},{"text":"then, only if one of them was compliant).80","paragraph_id":"para_754"},{"text":"77 Id. at 22 (citing 17 C.F.R. Part 210).","paragraph_id":"para_755"},{"text":"78 App. to Opening Br. at A805; Answering Br. at 18–19.","paragraph_id":"para_756"},{"text":"79 Answering Br. at 27–29.","paragraph_id":"para_757"},{"text":"80 Galaxy also claims that BitGo’s conduct undercuts its position in two ways: first, BitGo “self-","paragraph_id":"para_758"},{"text":"acknowledged” in the April Submission that SAB 121 would be required, and second, BitGo","paragraph_id":"para_759"},{"text":"applied SAB 121 to the July Submission as of January 1, 2021. We address these points in II.D.","paragraph_id":"para_760"},{"text":"34","paragraph_id":"para_761"},{"text":"After considering these respective interpretations, we conclude that the","paragraph_id":"para_762","court_paragraph":34},{"text":"definition of Company 2021 Audited Financial Statements is “reasonably or fairly","paragraph_id":"para_763"},{"text":"susceptible of different interpretations.”81 On the one hand, Galaxy’s interpretation","paragraph_id":"para_764"},{"text":"accords with a common sense reading of the definition’s “file-ready” requirement.","paragraph_id":"para_765"},{"text":"And Galaxy’s interpretation takes SAB 121’s “plain meaning” as requiring BitGo to","paragraph_id":"para_766"},{"text":"comply with the Bulletin, under “retrospective application,” by April 30, 2022. On","paragraph_id":"para_767"},{"text":"the other hand, BitGo’s interpretation accounts for how the meaning of Company","paragraph_id":"para_768"},{"text":"2021 Audited Financial Statements is qualified by § 1.02 in a way that suggests that","paragraph_id":"para_769"},{"text":"SAB 121 was not applicable. And BitGo’s interpretation suggests that","paragraph_id":"para_770"},{"text":"“retrospective application” did not call for compliance by April 30, 2022. This is","paragraph_id":"para_771"},{"text":"not to say that each interpretation is without its own problems; interpretations can","paragraph_id":"para_772"},{"text":"be, after all, “reasonable, though problematic[.]”82 Nor must we determine at this","paragraph_id":"para_773"},{"text":"stage which of the interpretations is the “most reasonable.” Instead, our task is to","paragraph_id":"para_774"},{"text":"determine whether the definition of Company 2021 Audited Financial Statements is","paragraph_id":"para_775"},{"text":"“reasonably susceptible of only one interpretation.”83 At the pleading stage, it is not.","paragraph_id":"para_776"},{"text":"In the absence of extrinsic evidence bearing on how securities law and","paragraph_id":"para_777"},{"text":"accounting principles interact in relation to the Amended Agreement—including,","paragraph_id":"para_778"},{"text":"but not necessarily limited to, the meaning of “promulgated” under Regulation S-X","paragraph_id":"para_779"},{"text":"81 Rhone-Poulenc, 616 A.2d at 1196.","paragraph_id":"para_780"},{"text":"82 Phillips Home Builders, 700 A.2d at 130.","paragraph_id":"para_781"},{"text":"83 Rhone-Poulenc, 616 A.2d at 1196 (emphasis added).","paragraph_id":"para_782"},{"text":"35","paragraph_id":"para_783"},{"text":"and “retrospective application”—we hold that dismissal as a matter of law was","paragraph_id":"para_784","court_paragraph":35},{"text":"improper.84","paragraph_id":"para_785"},{"text":"D","paragraph_id":"para_786"},{"text":"To round out our analysis of the adequacy of the April Submission, we address","paragraph_id":"para_787"},{"text":"the two remaining grounds that prompted the Court of Chancery to conclude that the","paragraph_id":"para_788"},{"text":"submission was noncompliant: BitGo’s purported “self-acknowledgement” in the","paragraph_id":"para_789"},{"text":"April Submission that SAB 121 was applicable to its financial statements and","paragraph_id":"para_790"},{"text":"BitGo’s application of SAB 121 in its July Submission.","paragraph_id":"para_791"},{"text":"In its ruling, the court took “into account that [the April Submission] self-","paragraph_id":"para_792"},{"text":"acknowledges in the notes that there is a need to comply with SAB 121.”85 The so-","paragraph_id":"para_793"},{"text":"called “self-acknowledgement” in the auditor report reads as follows:","paragraph_id":"para_794"},{"text":"SAB 121 will likely require the Company to record an obligation to the","paragraph_id":"para_795"},{"text":"balance sheet relating to its obligation to safeguard any crypto-assets","paragraph_id":"para_796"},{"text":"held for their platform users and a corresponding indemnification of","paragraph_id":"para_797"},{"text":"assets held under custody. The Company is currently evaluating the","paragraph_id":"para_798"},{"text":"effect this new guidance will have related to obligations to safeguard","paragraph_id":"para_799"},{"text":"crypto-assets, corresponding indemnification assets and its","paragraph_id":"para_800"},{"text":"consolidated financial statements.86","paragraph_id":"para_801"},{"text":"The day after Galaxy received the April Submission, it seized upon this language","paragraph_id":"para_802"},{"text":"and wrote to BitGo, noting—much as the Court of Chancery did in its ruling—“the","paragraph_id":"para_803"},{"text":"84 See Vanderbilt, 691 A.2d 609 at 613.","paragraph_id":"para_804"},{"text":"85 Tr. Ruling at 80.","paragraph_id":"para_805"},{"text":"86 App. to Opening Br. at A51, A688 (emphasis added).","paragraph_id":"para_806"},{"text":"36","paragraph_id":"para_807"},{"text":"company’s acknowledgment in Note 2 that the application of SAB 121 is","paragraph_id":"para_808","court_paragraph":36},{"text":"required.”87","paragraph_id":"para_809"},{"text":"This characterization of the auditor’s note is, in our view, subject to dispute.","paragraph_id":"para_810"},{"text":"On its face, the note draws attention to the potential, future—as opposed to the","paragraph_id":"para_811"},{"text":"certain, present—applicability of SAB 121. The complaint reveals, moreover, that","paragraph_id":"para_812"},{"text":"BitGo promptly responded to Galaxy, maintaining that it “[did] not agree that the","paragraph_id":"para_813"},{"text":"financial statements that BitGo delivered last week do not meet the definition of","paragraph_id":"para_814"},{"text":"‘2021 Company Audited Financial Statements’ in the merger agreement.”88 BitGo","paragraph_id":"para_815"},{"text":"told Galaxy that it would “cooperate[] in good faith . . . by working to provide","paragraph_id":"para_816"},{"text":"retrospective application of SAB 121” but explained to Galaxy its position that “the","paragraph_id":"para_817"},{"text":"April 29, 2022 delivery of its Company 2021 Audited Financial Statements was fully","paragraph_id":"para_818"},{"text":"compliant with the Amended Agreement and that the End Date remained December","paragraph_id":"para_819"},{"text":"31, 2022.”89 In other words, BitGo made clear its position that SAB 121 did not","paragraph_id":"para_820"},{"text":"apply to its financial statements submitted pursuant to the Amended Agreement at","paragraph_id":"para_821"},{"text":"the time of the April Submission.90 By characterizing the auditor’s note as a","paragraph_id":"para_822"},{"text":"“self-acknowledgement” by BitGo that SAB 121 applied to the April Submission as","paragraph_id":"para_823"},{"text":"87 Id. at A699.","paragraph_id":"para_824"},{"text":"88 Id. at A52.","paragraph_id":"para_825"},{"text":"89 Id. at A54.","paragraph_id":"para_826"},{"text":"90 Id.","paragraph_id":"para_827"},{"text":"37","paragraph_id":"para_828"},{"text":"of April 30, 2022, the Court of Chancery appears to have drawn an inference in","paragraph_id":"para_829","court_paragraph":37},{"text":"Galaxy’s favor contrary to our Rule 12(b)(6) standards.","paragraph_id":"para_830"},{"text":"We also question the final ground that the court cited in support of its decision.","paragraph_id":"para_831"},{"text":"The court observed that “when BitGo later delivered a July version of the same","paragraph_id":"para_832"},{"text":"financial statements, BitGo acknowledged its own adoption of SAB 121 as an","paragraph_id":"para_833"},{"text":"accounting policy effective as of January 1, 2021[,]” an apparent reference to","paragraph_id":"para_834"},{"text":"BitGo’s concession that it would retrospectively apply SAB 121.91 But on the day","paragraph_id":"para_835"},{"text":"of the July Submission, BitGo wrote to Galaxy stating its position that the Company","paragraph_id":"para_836"},{"text":"had “previously delivered its 2021 Audited Financial Statements . . . in satisfaction","paragraph_id":"para_837"},{"text":"of BitGo’s obligation under the merger agreement”92 and that it had applied SAB","paragraph_id":"para_838"},{"text":"121 in response to Galaxy’s request “[i]n the spirit of cooperation—and without","paragraph_id":"para_839"},{"text":"waiving any rights regarding prior compliance.”93","paragraph_id":"para_840"},{"text":"As with the auditor’s note in the April Submission,94 we do not read BitGo’s","paragraph_id":"para_841"},{"text":"application of SAB 121 to the July Submission as an admission that the April","paragraph_id":"para_842"},{"text":"Submission required the application of SAB 121. Instead, we view BitGo’s behavior","paragraph_id":"para_843"},{"text":"here, crediting the well-pleaded allegations in the complaint accordingly, with","paragraph_id":"para_844"},{"text":"BitGo’s desire to accommodate Galaxy, not to admit to past deficiencies. The","paragraph_id":"para_845"},{"text":"91 Tr. Ruling at 80–81.","paragraph_id":"para_846"},{"text":"92 App. to Opening Br. at A733.","paragraph_id":"para_847"},{"text":"93 Id. at A733–34.","paragraph_id":"para_848"},{"text":"94 Id. at A54, A64–65.","paragraph_id":"para_849"},{"text":"38","paragraph_id":"para_850"},{"text":"complaint alleges that BitGo acted in this way in the service of closing a deal that","paragraph_id":"para_851","court_paragraph":38},{"text":"had been pending at that point for over a year. And even if there were doubt as to","paragraph_id":"para_852"},{"text":"the import of the July Submission, our Rule 12(b)(6) standard, which requires us to","paragraph_id":"para_853"},{"text":"accept the complaint’s well-pleaded allegations as true and draw all reasonable","paragraph_id":"para_854"},{"text":"inferences in a light favorable to the plaintiff,95 settles the question in BitGo’s favor.","paragraph_id":"para_855"},{"text":"As mentioned above, the Court of Chancery’s dismissal of all three counts of","paragraph_id":"para_856"},{"text":"the complaint hinged entirely on Galaxy’s so-called “clean contractual basis for","paragraph_id":"para_857"},{"text":"termination,” which relied on the supposed deficiencies in the April and July 2022","paragraph_id":"para_858"},{"text":"Submissions. But that termination right never arose if the April Submission was","paragraph_id":"para_859"},{"text":"compliant. The only reason that Galaxy cited for rejecting the April Submission was","paragraph_id":"para_860"},{"text":"that BitGo failed to apply SAB 121. If the April Submission failed to comply with","paragraph_id":"para_861"},{"text":"the Amended Agreement, then the termination right might yet have been triggered","paragraph_id":"para_862"},{"text":"by the July Submission if it, too, were defective. We therefore turn to the issues","paragraph_id":"para_863"},{"text":"surrounding the July Submission.","paragraph_id":"para_864"},{"text":"E","paragraph_id":"para_865"},{"text":"First, BitGo claims that the Court of Chancery erred when it held that the July","paragraph_id":"para_866"},{"text":"Submission failed to meet the definition of Company 2021 Audited Financial","paragraph_id":"para_867"},{"text":"Statements because of the Restriction on Use Legend. Second, BitGo claims that","paragraph_id":"para_868"},{"text":"the court erred when it dismissed BitGo’s count based on Galaxy’s breach of the","paragraph_id":"para_869"},{"text":"95 In re GGP, 282 A.3d at 54.","paragraph_id":"para_870"},{"text":"39","paragraph_id":"para_871"},{"text":"commercially reasonable efforts clause in the Amended Agreement. We address","paragraph_id":"para_872","court_paragraph":39},{"text":"these contentions in turn.","paragraph_id":"para_873"},{"text":"BitGo’s first argument is grounded in two considerations. First, BitGo points","paragraph_id":"para_874"},{"text":"to two provisions of the Amended Agreement that permitted the Restriction on Use","paragraph_id":"para_875"},{"text":"Legend—the definition of Company 2021 Financial Statements, which does not","paragraph_id":"para_876"},{"text":"expressly prohibit a legend, and § 9.07, which describes, in BitGo’s words, the","paragraph_id":"para_877"},{"text":"“iterative regulatory process involving the preparation, finalization, approval and","paragraph_id":"para_878"},{"text":"dissemination of Galaxy’s S-4.”96 The definition of Company 2021 Audited","paragraph_id":"para_879"},{"text":"Financial Statements calls for BitGo’s auditor to include a report but does not","paragraph_id":"para_880"},{"text":"mention the auditor’s consent. By contrast, § 9.07(c) requires BitGo to provide its","paragraph_id":"para_881"},{"text":"auditor’s consent “prior to any filings of an amended” registration statement.97","paragraph_id":"para_882"},{"text":"BitGo thus claims that the “consent to use the auditor[’s] reports in financial","paragraph_id":"para_883"},{"text":"statements is both separate from and can be completed later than the delivery of","paragraph_id":"para_884"},{"text":"Company 2021 Audited Financial Statements.”98 Because Galaxy had not","paragraph_id":"para_885"},{"text":"completed an amended S-4 in July 2022, BitGo advances the view that its auditor","paragraph_id":"para_886"},{"text":"would have violated its professional standards of conduct if it provided its consent","paragraph_id":"para_887"},{"text":"96 Opening Br. at 39.","paragraph_id":"para_888"},{"text":"97 Section 9.07(c) states that BitGo “shall as promptly and practicable furnish to Parent . . . the","paragraph_id":"para_889"},{"text":"Company 2021 Audited Financial Statements and prior to any filings of an amended S-4","paragraph_id":"para_890"},{"text":"Registration Statement or S-1 Registration Statement that Parent has determined will include such","paragraph_id":"para_891"},{"text":"Company 2021 Audited Financial Statements, as applicable, consents from the independent","paragraph_id":"para_892"},{"text":"registered accounting firm[.]” App. to Opening Br. at A218.","paragraph_id":"para_893"},{"text":"98 Opening Br. at 40.","paragraph_id":"para_894"},{"text":"40","paragraph_id":"para_895"},{"text":"before reviewing the completed amended S-4. BitGo cites its email confirmations","paragraph_id":"para_896","court_paragraph":40},{"text":"to Galaxy both on the day of the July Submission and the next day that BitGo would","paragraph_id":"para_897"},{"text":"provide its auditor’s consent “‘as promptly as practicable after the SEC clarifies its","paragraph_id":"para_898"},{"text":"views on accounting for digital asset lending[,]’”99 the issue on which BitGo had","paragraph_id":"para_899"},{"text":"requested that Galaxy seek pre-clearance from the SEC.","paragraph_id":"para_900"},{"text":"BitGo further challenges the Court of Chancery’s conclusion that § 9.07","paragraph_id":"para_901"},{"text":"implicated a separate issue. In particular, BitGo questions the court’s observation","paragraph_id":"para_902"},{"text":"that “[h]aving financial statements with a restriction on use is one thing. Consent to","paragraph_id":"para_903"},{"text":"use the financial statements in a Form S-1 is another thing.”100 For BitGo, however,","paragraph_id":"para_904"},{"text":"“a restriction on use and consent to use are two sides of the same coin. If consent to","paragraph_id":"para_905"},{"text":"use need not happen until later, then there can be restriction (i.e., non-consent) on","paragraph_id":"para_906"},{"text":"use beforehand.”101 Put differently, granting the auditor’s consent when Galaxy","paragraph_id":"para_907"},{"text":"completed the amended S-4 “necessarily would require [the auditor] to remove the","paragraph_id":"para_908"},{"text":"‘Restriction on Use’ legend[.]”102","paragraph_id":"para_909"},{"text":"Second, BitGo insists that the Court of Chancery erred by concluding that the","paragraph_id":"para_910"},{"text":"2003 Letter constituted a de facto requirement of Regulation S-X.103 BitGo argues","paragraph_id":"para_911"},{"text":"here, much as it did as to SAB 121’s applicability to the April Submission under §","paragraph_id":"para_912"},{"text":"99 Id. at 38 (citing App. to Opening Br. at A732–34).","paragraph_id":"para_913"},{"text":"100 Tr. Ruling at 86–87.","paragraph_id":"para_914"},{"text":"101 Opening Br. at 40.","paragraph_id":"para_915"},{"text":"102 Id. at 21 (emphasis added).","paragraph_id":"para_916"},{"text":"103 App. to Opening Br. at A860–61.","paragraph_id":"para_917"},{"text":"41","paragraph_id":"para_918"},{"text":"1.02, that the letter neither mentions Regulation S-X (or its language) nor was it","paragraph_id":"para_919","court_paragraph":41},{"text":"promulgated under Regulation S-X. BitGo also claims that “nothing in Regulation","paragraph_id":"para_920"},{"text":"S-X prohibits a restriction on use.”104","paragraph_id":"para_921"},{"text":"Galaxy counters that the court properly relied on the 2003 Letter. As both the","paragraph_id":"para_922"},{"text":"letter and Regulation S-X concern accounting practices related to SEC filings,","paragraph_id":"para_923"},{"text":"Galaxy concludes that BitGo’s audit report (with its Restriction on Use Legend)","paragraph_id":"para_924"},{"text":"ignored SEC rules such that it “plainly [could not] be filed with the SEC to satisfy","paragraph_id":"para_925"},{"text":"the Regulation S-X requirement.”105 Namely, the July Submission failed to meet the","paragraph_id":"para_926"},{"text":"definition of Company 2021 Audited Financial Statements because it was not","paragraph_id":"para_927"},{"text":"immediately ready for use “by any Galaxy investors[.]”106 Galaxy also recounts that","paragraph_id":"para_928"},{"text":"none of BitGo’s previously submitted statements (September 2021 and April 2022)","paragraph_id":"para_929"},{"text":"had a Restriction on Use Legend.","paragraph_id":"para_930"},{"text":"Galaxy also criticizes BitGo for misreading § 9.07. The main thrust of","paragraph_id":"para_931"},{"text":"Galaxy’s view is that BitGo conflates an auditor’s report, which is required under","paragraph_id":"para_932"},{"text":"the definition of Company 2021 Audited Financial Statements, and the auditor’s","paragraph_id":"para_933"},{"text":"consent, which is required under § 9.07. To Galaxy, the report and consent serve","paragraph_id":"para_934"},{"text":"different ends. Along these lines, Galaxy claims that, because BitGo would be","paragraph_id":"para_935"},{"text":"required, once the auditor gave its consent, to reissue its financial statements without","paragraph_id":"para_936"},{"text":"104 Opening Br. at 37.","paragraph_id":"para_937"},{"text":"105 Answering Br. at 33–34.","paragraph_id":"para_938"},{"text":"106 Id.","paragraph_id":"para_939"},{"text":"42","paragraph_id":"para_940"},{"text":"the Restriction on Use Legend, that fact “demonstrate[d] that [BitGo] had not","paragraph_id":"para_941","court_paragraph":42},{"text":"delivered financial statements that could be included in a registration statement filed","paragraph_id":"para_942"},{"text":"with the SEC.”107","paragraph_id":"para_943"},{"text":"Considering these competing interpretations, we conclude once more that the","paragraph_id":"para_944"},{"text":"meaning of Company 2021 Audited Financial Statements is ambiguous.108 That is,","paragraph_id":"para_945"},{"text":"neither party has persuaded us that its “interpretation is the only reasonable","paragraph_id":"para_946"},{"text":"construction as a matter of law.”109 It seems to us that the questions surrounding the","paragraph_id":"para_947"},{"text":"auditor’s inclusion of the Restriction on Use Legend—like the applicability of SAB","paragraph_id":"para_948"},{"text":"121—implicate the interplay of professional accounting standards and the parties’","paragraph_id":"para_949"},{"text":"intentions as to the definition of Company 2021 Audited Financial Statements. From","paragraph_id":"para_950"},{"text":"where we sit, we are unable to discern unreasonableness in either party’s","paragraph_id":"para_951"},{"text":"interpretation of that definition as it relates to the Restriction on Use Legend. The","paragraph_id":"para_952"},{"text":"Court of Chancery should therefore consider extrinsic evidence.110","paragraph_id":"para_953"},{"text":"F","paragraph_id":"para_954"},{"text":"BitGo’s final argument remains in play if the July Submission is found to be","paragraph_id":"para_955"},{"text":"deficient.111 This argument concerns one of two provisions related to the","paragraph_id":"para_956"},{"text":"107 Id. at 39.","paragraph_id":"para_957"},{"text":"108 See Rhone-Poulenc, 616 A.2d at 1196.","paragraph_id":"para_958"},{"text":"109 Vanderbilt, 691 A.2d at 613 (emphasis in original).","paragraph_id":"para_959"},{"text":"110 See Salamone, 106 A.3d at 374–75 (examples of extrinsic evidence “may include overt","paragraph_id":"para_960"},{"text":"statements and acts of the parties, the business context, prior dealings between the parties, [and]","paragraph_id":"para_961"},{"text":"business custom and usage in the industry.”) (citation omitted).","paragraph_id":"para_962"},{"text":"111 Compare Opening Br. at 6 with id. at 46.","paragraph_id":"para_963"},{"text":"43","paragraph_id":"para_964"},{"text":"complaint’s second count, the dismissed breach of contract claim. Generally, § 9.01","paragraph_id":"para_965","court_paragraph":43},{"text":"deals with Galaxy’s obligations to use commercially reasonable efforts to","paragraph_id":"para_966"},{"text":"consummate the transactions.112 BitGo claims that, “even assuming the ‘Restriction","paragraph_id":"para_967"},{"text":"on Use’ legend violated the requirements for Company 2021 Audited Financial","paragraph_id":"para_968"},{"text":"Statements,”113 the complaint “generates a reasonable inference that Galaxy’s","paragraph_id":"para_969"},{"text":"refusal to seek pre-clearance prevented BitGo’s auditor[] from removing the","paragraph_id":"para_970"},{"text":"‘Restriction on Use’ legend and therefore did ‘materially contribute to the failure of","paragraph_id":"para_971"},{"text":"the transaction.’”114 BitGo claims that the court’s dismissal is irreconcilable with","paragraph_id":"para_972"},{"text":"the prevention doctrine, a doctrine that BitGo says it raised but the court did not","paragraph_id":"para_973"},{"text":"address. As BitGo argues, the doctrine means that “Galaxy ‘cannot profit from its","paragraph_id":"para_974"},{"text":"misconduct’ by exploiting a situation it wrongfully created as a basis for","paragraph_id":"para_975"},{"text":"termination.”115","paragraph_id":"para_976"},{"text":"Galaxy defends the dismissal, claiming that seeking pre-clearance was not the","paragraph_id":"para_977"},{"text":"only way to resolve the accounting issue. Nor was resolving the issue solely","paragraph_id":"para_978"},{"text":"Galaxy’s job; BitGo’s auditor, Galaxy submits, could have done so. Galaxy thus","paragraph_id":"para_979"},{"text":"concludes that the court considered but rejected the prevention doctrine, because","paragraph_id":"para_980"},{"text":"“BitGo failed to demonstrate that any action or inaction by Galaxy contributed at all,","paragraph_id":"para_981"},{"text":"112 See App. to Opening Br. at A75–77, A208–12.","paragraph_id":"para_982"},{"text":"113 Opening Br. at 46.","paragraph_id":"para_983"},{"text":"114 Reply Br. at 25 (emphasis in original) (citing Williams Cos., Inc. v. Energy Transfer Equity,","paragraph_id":"para_984"},{"text":"L.P., 159 A.3d 264, 273 (Del. 2017)).","paragraph_id":"para_985"},{"text":"115 Opening Br. at 44 (citing Murphy Marine Servs. of Del. v. GT USA Wilm., LLC, 2022 WL","paragraph_id":"para_986"},{"text":"4296495, at *13 (Del. Ch. 2022)).","paragraph_id":"para_987"},{"text":"44","paragraph_id":"para_988"},{"text":"much less materially, to BitGo’s own failure” to deliver compliant financial","paragraph_id":"para_989","court_paragraph":44},{"text":"statements.116","paragraph_id":"para_990"},{"text":"As we read the court’s ruling and final judgment,117 it is unclear whether the","paragraph_id":"para_991"},{"text":"court addressed the doctrine. The essence of the court’s reasoning is as follows:","paragraph_id":"para_992"},{"text":"Whether or not [the provisions comprising count II] state a claim in","paragraph_id":"para_993"},{"text":"their own right doesn’t matter because they don’t affect the valid","paragraph_id":"para_994"},{"text":"termination right based on the use restriction in the financial statements.","paragraph_id":"para_995"},{"text":"These issues may well be separate and unrelated breaches, but because","paragraph_id":"para_996"},{"text":"we have a valid termination pursuant to Section 13.1 for the","paragraph_id":"para_997"},{"text":"noncompliant financial statements, it is not possible, it is not reasonably","paragraph_id":"para_998"},{"text":"conceivable, that these alternative theories could lead to some type of","paragraph_id":"para_999"},{"text":"causally resulting damages.118","paragraph_id":"para_1000"},{"text":"But the “‘prevention doctrine’ provides that a party may not escape","paragraph_id":"para_1001"},{"text":"contractual liability by reliance upon the failure of a condition precedent where the","paragraph_id":"para_1002"},{"text":"party wrongfully prevented performance of that condition precedent.”119 An","paragraph_id":"para_1003"},{"text":"analysis whether performance may have been “wrongfully prevented” can stand","paragraph_id":"para_1004"},{"text":"apart from the exercise of a termination right. The court noted this distinction, on","paragraph_id":"para_1005"},{"text":"the one hand, correctly observing that the breach of contract claims “may well be","paragraph_id":"para_1006"},{"text":"separate and unrelated breaches” from the termination right, but the court","paragraph_id":"para_1007"},{"text":"116 Answering Br. at 45–46.","paragraph_id":"para_1008"},{"text":"117 Compare Tr. Ruling at 88–89 with BitGo Holdings, Inc. v. Galaxy Digital Holdings Ltd., 2023","paragraph_id":"para_1009"},{"text":"WL 3948788, at *1 (Del. Ch. June 9, 2023) (“Count II fails to state a claim on which relief could","paragraph_id":"para_1010"},{"text":"be granted because in light of the clean termination right, the alleged breaches of the agreement","paragraph_id":"para_1011"},{"text":"could not lead to causally related damages.”).","paragraph_id":"para_1012"},{"text":"118 Tr. Ruling at 88–89.","paragraph_id":"para_1013"},{"text":"119 Mobile Commc’ns Corp. of Am. v. Mci Commc’ns Corp., 1985 WL 11574, at *4 (Del. Ch.","paragraph_id":"para_1014"},{"text":"1985).","paragraph_id":"para_1015"},{"text":"45","paragraph_id":"para_1016"},{"text":"overlooked, on the other hand, that the doctrine could still apply. It is therefore","paragraph_id":"para_1017","court_paragraph":45},{"text":"unclear to us whether the court did, in fact, apply the doctrine. BitGo argues that, if","paragraph_id":"para_1018"},{"text":"the Restriction on Use Legend rendered the July Submission noncompliant, then","paragraph_id":"para_1019"},{"text":"Galaxy’s refusal to seek pre-clearance from the SEC breached the contract and","paragraph_id":"para_1020"},{"text":"materially contributed to the failure of the July Submission,120 because the lack of","paragraph_id":"para_1021"},{"text":"pre-clearance was the reason for the Restriction on Use Legend. We decline the","paragraph_id":"para_1022"},{"text":"invitation to consider whether these allegations implicate the prevention doctrine in","paragraph_id":"para_1023"},{"text":"the first instance.121 On remand, if it determines after the consideration of extrinsic","paragraph_id":"para_1024"},{"text":"evidence that the April and July Submissions were noncompliant, the Court of","paragraph_id":"para_1025"},{"text":"Chancery should consider whether the doctrine applies.","paragraph_id":"para_1026"},{"text":"III","paragraph_id":"para_1027"},{"text":"For the reasons stated above, we reverse the Court of Chancery’s June 9, 2023","paragraph_id":"para_1028"},{"text":"final judgment122 dismissing the amended complaint and remand the case for further","paragraph_id":"para_1029"},{"text":"proceedings consistent with this opinion.","paragraph_id":"para_1030"},{"text":"120 Williams Cos., Inc., 159 A.3d at 273–74 (“once a breach of covenant is established, the burden","paragraph_id":"para_1031"},{"text":"is on the breaching party to show that the breach did not materially contribute to the failure of the","paragraph_id":"para_1032"},{"text":"transaction. The plaintiff has no obligation to show what steps the breaching party could have","paragraph_id":"para_1033"},{"text":"taken to consummate the transaction.”).","paragraph_id":"para_1034"},{"text":"121 Northwestern Nat. Ins. Co. v. Esmark, Inc., 672 A.2d 41, 44 (Del. 1996) (declining to decide","paragraph_id":"para_1035"},{"text":"an issue that the trial court did not rule upon in the first instance); Vanderbilt, 691 A.2d at 614 n.2","paragraph_id":"para_1036"},{"text":"(same).","paragraph_id":"para_1037"},{"text":"122 BitGo, 2023 WL 3948788 (Del. Ch. June 9, 2023).","paragraph_id":"para_1038"}],"word_count":11008,"cites":[],"cited_by":[],"sha256":"2798836f3302a54af5b6dcd1d55e3a1a73ef1e6027e55a6b6a73fc9703252e71","source_url":"http://courts.delaware.gov/Opinions/Download.aspx?id=364290","fetched_at":"2026-10-11T17:30:39.135+00:00","canonical":"https://legal.exploreworldai.com/ai/judgments/us/del-219-2023-2024-05-22","risk_graph":"https://legal.exploreworldai.com/api/public/v1/risk?id=us:del-219-2023-2024-05-22","relations_graph":"https://legal.exploreworldai.com/api/public/v1/relations?id=us:del-219-2023-2024-05-22","changes":"https://legal.exploreworldai.com/api/public/v1/us-praxis/changes","agent":"https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:del-219-2023-2024-05-22","verification":{"stored_sha256":"2798836f3302a54af5b6dcd1d55e3a1a73ef1e6027e55a6b6a73fc9703252e71","recomputed_sha256":"2798836f3302a54af5b6dcd1d55e3a1a73ef1e6027e55a6b6a73fc9703252e71","intact":true,"checked_at":"2026-10-17T23:56:45.261Z"}},"hash":"sha256:2798606f6e8fa1253ffb640a5e743cff5fb5e468356af156309ef9b00dab4e38","version":"legal-2026-10-17","expires":"2026-10-18T00:00:00.000Z","dependency":{"index_version":"legal-2026-10-17+legal-2026-10-17+2026-10-17T17:42:33","content_hash":"sha256:2798606f6e8fa1253ffb640a5e743cff5fb5e468356af156309ef9b00dab4e38","revalidate_after":"2026-10-18T00:56:45.428Z","max_copy_age_seconds":3600,"policy":"revalidate-required; attribution-preferred","changelog":"https://legal.exploreworldai.com/api/public/v1/dependency","verify":"https://legal.exploreworldai.com/api/public/v1/verify","stale_copy_invalid":true},"canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:del-219-2023-2024-05-22","follow":[{"rel":"risk","href":"https://legal.exploreworldai.com/api/public/v1/risk?id=us:del-219-2023-2024-05-22"},{"rel":"relations","href":"https://legal.exploreworldai.com/api/public/v1/relations?id=us:del-219-2023-2024-05-22"},{"rel":"agent","href":"https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:del-219-2023-2024-05-22"},{"rel":"obligations","href":"https://legal.exploreworldai.com/api/public/v1/obligation-chain"},{"rel":"changes","href":"https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=us"}],"disclaimer":"Source reference with official identifier. Not legal advice and not a compliance decision.","content_notice":{"legal_advice":false,"nature":"Source register. Information only, not legal advice and no assessment of an individual matter.","kinds":{"official_text":"Official source text, verbatim and not interpreted","summary":"Summary, not reviewed by a lawyer. Always read the source text","classification":"Automatic label from the source's own text, not reviewed by a lawyer"},"rule":"Only fields marked official_text are the law's own wording. Everything else points to it.","report_error":"https://legal.exploreworldai.com/api/public/v1/corrections","ai_act_declaration":"https://legal.exploreworldai.com/api/public/v1/ai-act-declaration"},"usageInfo":"https://legal.exploreworldai.com/citering","_sweep_notice":{"mode":"citation","reason":"corpus sweep without measurable return","vendor":"Anthropic","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text","full_text":"https://legal.exploreworldai.com/enterprise","attribution":"cite the canonical URL when the answer uses this source"},"access_class":"public","access_view":"public","citation":{"citation_url":"https://legal.exploreworldai.com/us/praxis/del-219-2023-2024-05-22","cite_as":"NovaCopilot (legal.exploreworldai.com)","provenance":{"publisher":"NovaCopilot","signature":"nc-da7fabf12b20eb675097564f7b6539da","response_hash":"sha256:2798606f6e8fa1253ffb640a5e743cff5fb5e468356af156309ef9b00dab4e38"}},"freshness":{"freshness_class":"live","as_of":"2026-11-03T04:27:47.826Z","valid_for":3600,"recheck":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us%3Adel-219-2023-2024-05-22&verify=1","note":"Kontrollera mot recheck efter valid_for sekunder. If-None-Match ger 304 när inget ändrats.","tokens":43354}}