Mike Novogratz's Galaxy Digital has struck a $200 million settlement with New York Attorney General Letitia James. The deal concerns alleged irregularities in advertising the now-defunct cryptocurrency Terra ($LUNA).
Galaxy Digital reportedly concealed its exit strategy while openly promoting LUNA as a potential investment. The firm's endorsements were critical to Terra's success with American investors. According to the settlement, Galaxy traded millions of tokens at a substantial profit without disclosing the transaction. This approach boosted LUNA's market price from $0.31 in October 2020 to $119.18 in April 2022.
The NYAG contended Galaxy Digital's activities violated New York's Martin Act and Executive Act. The firm did not admit or deny the claims. LUNA and its sister coin TerraUSD (UST) failed in May 2022, resulting in a $40B loss. This catastrophe resulted in the bankruptcies of several crypto titans.
Do Kwon, Terra's cofounder, was detained in Montenegro and is scheduled to stand trial in the United States in January 2026. Terraform Labs, the firm behind Terra, reached a $4.47B settlement with the SEC. The company is currently dissolving and unwinding assets in bankruptcy. Galaxy Digital's settlement shows the increasing regulatory scrutiny of the cryptocurrency industry.
