TechFlow news, on March 28, according to Axios, the New York Attorney General's Office has reached a $200 million settlement with cryptocurrency investment firm Galaxy Digital over its promotion of LUNA tokens prior to the collapse of the Terra ecosystem.
The New York Attorney General's Office accused Galaxy Digital of violating the Martin Act and the Executive Law by promoting assets without disclosing its financial interests in them. According to the settlement documents, while publicly promoting LUNA, Galaxy sold millions of tokens into the market at prices far above its initial cost basis, without disclosing this activity to the public.
Specific allegations include:
- Terraform Labs sought Galaxy as a well-known U.S. investor to promote LUNA in the United States
- Galaxy purchased 18.5 million LUNA tokens for $4 million, receiving a 30% discount, with tokens released over 12 months
- Galaxy CEO Michael Novogratz became a major promoter of LUNA, even getting a "howling wolf" tattoo when LUNA surpassed $100
- During the period of promoting LUNA, Galaxy sold most of its holdings, profiting over $100 million
- By March 2022, just before the market collapse, Galaxy had nearly completely exited its LUNA position, realizing "hundreds of millions of dollars" in profit
Under the terms of the settlement, Galaxy Digital will pay $200 million over three years, with an initial payment of $40 million due within two weeks. In addition, Galaxy has agreed to implement multiple policies to prevent conflicts of interest, including legal review of all token transactions.
As part of the settlement, Galaxy neither admitted nor denied the findings outlined by the New York Attorney General's Office in the documents.
