The New York Attorney General has reached a $200 Million Settlement with Galaxy Digital in response to the collapse of LUNA in 2022. The $200 million will be paid over three years, starting with $40 million in two weeks. This follows a similar settlement by the SEC, which reached an agreement with a subsidiary of Jump Crypto for $123 million related to LUNA.
Galaxy Digital’s Role in Terra Luna Matter
The Terra LUNA fallout from this failure has led to a $200 million settlement especially after allegations that Galaxy Digital violated the Martin Act and the Executive Law by promoting LUNA without disclosing its vested interest in the asset. Terraform Labs, the creator of LUNA and UST, designed the stablecoin to maintain its peg to the US dollar through an automated buying and selling mechanism tied to LUNA. $LUNA rose during 2021, and Michael Novogratz, CEO of Galaxy Digital, was one of LUNA’s most vocal advocates.
The $200 million settlement pinpoints that while Novogratz publicly expressed his bullish views on LUNA, even going so far as to get a tattoo after the coin’s price surpassed $100, Galaxy Digital sold millions of LUNA tokens at significant profits, without revealing these sales to the public. The firm allegedly sold these tokens at a time when it was actively promoting the asset.
The settlement claims that Terraform Labs sought Galaxy’s endorsement to gain a surge in the US market. Terraform Labs also got in a deal with Galaxy to purchase 18.5 million LUNA tokens at a 30% discount, which it later sold over the course of the year, making over $100 million in profits. By March 2022, Galaxy had nearly exited its entire position and raked in hundreds of millions of dollars, while promoting $LUNA.
Even though Galaxy did not admit to the accusations, the settlement includes various reforms and includes stricter policies to prevent conflicts of interest and legal reviews of crypto deals.
