Galaxy Digital, a major player in crypto investment, has reached a $200 million settlement with the New York State Attorney General over accusations of supporting the troubled LUNA token.
The case centers around claims that the company, under the direction of its founder Michael Novogratz, assisted in promoting and purchasing LUNA tokens at a significant discount in 2020, which allegedly fueled interest in the token in the West.
According to New York Attorney General Letitia James, Galaxy Digital acquired 18.5 million LUNA tokens from Terraform Labs for $0.22 each, a price below the market value at the time. James further argues that Galaxy Digital’s efforts helped increase the token’s visibility, culminating in a surge in price.
This included Novogratz’s infamous promise to get a tattoo if LUNA reached $100, which occurred in December 2021. However, despite publicly endorsing the token, Galaxy sold millions of tokens without disclosing these sales, profiting significantly as the price soared.
The company had largely liquidated its LUNA holdings by the time the Terra ecosystem collapsed in May 2022, and Novogratz’s public enthusiasm for the asset continued until its downfall. Meanwhile, Terraform Labs founder Do Kwon, who had been closely associated with the project, was arrested in Montenegro in 2023 while trying to flee the country. He now faces multiple fraud charges, with an extradition to the U.S. and a looming trial set for 2026.
The settlement signals a growing scrutiny on crypto firms that played roles in the meteoric rise and subsequent crash of high-profile digital assets. As regulatory pressure intensifies across the industry, this case underscores the potential legal and financial repercussions that major crypto investment firms face when their strategies involve promoting risky and volatile assets. Despite the hefty fine, Galaxy Digital’s resolution with the New York Attorney General may set a precedent for future actions against firms linked to the collapse of other projects within the cryptocurrency space.
Editorial Team
Reporter at Coindoo
Source: https://coindoo.com/galaxy-digital-settles-200-million-lawsuit-over-luna-token-allegations/