Galaxy Digital has agreed to a $200 million settlement with the New York Attorney General (NYAG) over allegations that it promoted and sold the now-collapsed Luna digital asset without proper disclosures. The NYAG’s filing accuses Galaxy of violating the Martin Act and Executive Law by failing to disclose its financial interest in Luna while publicly backing the token.
According to the filing, Galaxy acquired 18.5 million Luna tokens at a 30% discount before promoting and selling them without informing investors. Terraform Labs, the company behind Luna, created the token to help maintain the peg of its TerraUSD stablecoin to the US dollar. However, in 2022, a large sell-off of TerraUSD triggered market panic, causing Luna’s price to plummet.
Luna’s collapse led to a $40 billion industry-wide meltdown, affecting Three Arrows Capital, Genesis Global Capital, and FTX. Terraform Labs and former CEO Do Kwon previously settled with the SEC for $4.5 billion over their role in the disaster.
Galaxy’s founder, Mike Novogratz, was a vocal supporter of Luna, famously vowing to get a Luna-themed tattoo if it surpassed $100. However, as he publicly expressed optimism, Galaxy was quietly offloading its holdings for significant profits.
The settlement filing states: “While Novogratz posted pictures of his tattoo and expressed his Luna bullishness to the public, Galaxy sold millions of tokens at many multiples of its initial cost without disclosing that it was selling.” It continues: “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.”