The Block: Galaxy Digital to acquire crypto custodian BitGo for $1.2 billion

Mike Novogratz's crypto merchant bank Galaxy Digital is set to acquire crypto custodian BitGo for $1.2 billion.

Announcing the news on Wednesday, Galaxy Digital said the deal would be made up of a mix of stock and cash — $265 million in cash and the rest in 33.8 million newly issued shares of Galaxy Digital.

Once completed, the acquisition will make BitGo shareholders own approximately 10% of Galaxy Digital . The deal is expected to close in the fourth quarter of 2021. Upon closing, BitGo co-founder and CEO Mike Belshe will join Galaxy Digital as deputy CEO and become a member of the company's board of directors.

"The acquisition of BitGo establishes Galaxy Digital as a one-stop-shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology," said Mike Novogratz, founder and CEO of Galaxy Digital . "The power of the technology, solutions, and people we will have as a result of this acquisition will unlock unique value for our clients and drive long-term growth for our combined business."

Founded in 2013, BitGo provides crypto custody, trading, prime lending, portfolio, and tax management services. The firm claims to have over $40 billion of assets under custody, serving over 150 exchanges and over 400 institutional clients.

BitGo had been looking for a buyer for months. Last December, there were reports that PayPal will acquire the firm, but those talks fell through. PayPal later acquired crypto custodian Curv for an undisclosed sum.