CoinSmart has announced that it has rejected notice from Coinsquare to back out of the pair’s acquisition deal.
“CoinSmart considers that Coinsquare remains bound by the Share Purchase Agreement and intends to hold Coinsquare to its obligations under the Share Purchase Agreement,” CoinSmart wrote in a press release on Tuesday.
The crypto trading startup said it has written to Coinsquare to advise “that the notice [to terminate] is invalid and that it expects Coinsquare to close the transaction on the terms set out in the Share Purchase Agreement.” Coinsquare had originally proposed to buy CoinSmart for around $29 million in cash and shares.
CoinSmart said it rejected the notice “on the basis that it is invalid and without merit.”
The purported rejection comes just one week after CoinSmart made public that Coinsquare had delivered notice to CoinSmart to terminate its agreement to acquire CoinSmart last fall.
CoinSmart co-founder and CEO Justin Hartzman told BetaKit at the time, “The notice of termination took the CoinSmart board and management by surprise as they had been given assurances by Coinsquare that the final regulatory approvals would be obtained this week.”
Hartzman added that CoinSmart’s management and board of directors were in the process of evaluating the validity and effectiveness of Coinsquare’s notice.
For its part, Coinsquare told BetaKit that it “exercised its rights to terminate the agreement with CoinSmart in accordance with its terms,” but provided no further comment when reached. Coinsquare COO Eric Richmond later told The Globe and Mail that after conducting standard due diligence, the company believed the deal wasn’t worth the high costs of acquiring a public company (CoinSmart trades on the NEO Exchange).
Two days later, it was reported that WonderFi and Coinsquare are exploring a possible merger.
Shortly after, WonderFi released a statement (at the request of the Investment Industry Regulatory Organization of Canada) regarding preliminary discussions with companies about potential acquisitions.
WonderFi did not confirm or deny a potential merger with Coinsquare, but stated that it “has held preliminary discussions with various third parties with respect to both potential acquisitions and [WonderFi] being acquired.” WonderFi called this consistent with its past practices and its “general acquisition strategy.”
Regarding the report of the potential WonderFi and Coinsquare merger, CoinSmart noted that it is “aware of recent market rumors concerning a transaction involving Coinsquare and another party and is continuing to monitor the situation and any impact it may have had or may have on the agreed upon transaction with Coinsquare.”
In regards to the purchase agreement between Coinsquare and CoinSmart, the latter stated that it has “met and expects to be able to meet all its requirements” under the agreement
“Coinsquare’s invalid attempt to terminate the Share Purchase Agreement appears to be the result of internal matters concerning Coinsquare and not as a result of anything to do with CoinSmart or its business,” CoinSmart’s statement read.
The startup added that “if necessary, CoinSmart intends to vigorously contest Coinsquare’s purported termination of the Share Purchase Agreement and to pursue available remedies to enforce its contractual rights under the Share Purchase Agreement, including, among other things, the right to specific performance or the right to monetary damages.”
In response to a request for comment about CoinSmart rejecting the notice, a spokesperson for Coinsquare told BetaKit, “Coinsquare had a termination right under the transaction agreement with CoinSmart, which we validly exercised.”
BetaKit has reached out to CoinSmart for comment.
Feature image courtesy CoinSmart.