Galaxy Digital To Pay $200M For NYAG Settlement Over LUNA Sales

Galaxy Digital, a crypto investment firm founded by Michael Novogratz, has agreed to pay a $200 million for a settlement with the New York Attorney General’s (NYAG) office. Allegedly, Galaxy Digital violated the Martin Act and New York Executive Law by promoting LUNA.

Previously, the collapse of Terra’s LUNA token had led to a staggering loss of $40 billion. Now, Galaxy Digital is paying $200 million for settling with the NYAG due to its involvement with LUNA.

NYAG Settlement: Galaxy Digital To Pay $200M

In a recent development, the New York Attorney General’s office has announced a $200 million settlement with Galaxy Digital, a prominent crypto investment firm founded by Michael Novogratz. The settlement claims that the firm promoted LUNA without disclosing its financial interests in the asset, thus violating the Martin Act and Executive Law.

Specifically, Galaxy Digital is accused of buying LUNA in 2020, promoting it, and then selling its holdings without revealing its intent to sell, thereby failing to disclose its financial stake in the asset. The office noted in the filing that the crypto firm sold “millions of tokens into the market at many multiples of its initial cost without disclosing that it was selling.”

The NYAG’s crackdown on the investment giant comes amid the US SEC’s recent regulatory overhaul that led to the dismissal of multiple crypto lawsuits. In the latest development, the SEC dropped its appeal against Ripple in the XRP lawsuit.

Galaxy Digital Pushed LUNA Price, Alleges NYAG

Further, the office alleged the crypto platform of boosting the LUNA token’s price. The NYAG statement read, “Ultimately, Galaxy helped a little-known token increase its market price from $0.31 in October 2020 to $119.18 in April 2022, while profiting in the hundreds of millions of dollars.”

Galaxy Digital neither admitted nor denied the allegations. However, the NYAG claimed that Michael Novogratz was one of the most vocal supporters of LUNA. The filing stated that Novogratz once acknowledged the platform’s crucial role in boosting interest in LUNA “through its marketing efforts.” In addition to explicitly showing confidence in the lesser-known token, Galaxy Digital has been involved in huge sales multiple times.

In a significant development, Michael Novogratz hailed the recent regulatory shift in the US landscape as a historic turning point. He views the acceptance of a Bitcoin reserve as a game-changer. It is poised to accelerate global adoption and cement the cryptocurrency’s position as a mainstream asset.

LUNA Token Crashes To Weekly Lows

Reportedly, Galaxy Digital purchased 18.5 million LUNA tokens at a discounted rate. Then, the company sold most of them in batches, generating over $100 million in revenue by March 2022. While the NYAG reported this in the latest filing, the LUNA token crashed to a weekly low of $0.196.

As of press time, LUNA is valued at $0.1972, down by more than 7% in a day. Over the past week and month, the token has seen notable dips of 4% and 13%, respectively.