Galaxy Digital Secures $200 Million Settlement in Luna Token Controversy
The New York Attorney General (NYAG) has recently filed a significant lawsuit against Galaxy Digital, accusing the company of serious violations of the Martin Act and Executive Law. This case centers around Galaxy’s alleged involvement in the dramatic collapse of the Luna cryptocurrency, which has captured the attention of the financial community.
Allegations Against Galaxy Digital
According to the filing, Galaxy Digital is accused of acquiring **18.5 million Luna tokens** at a staggering **30% discount**. The company then allegedly promoted and sold these tokens without adhering to necessary disclosure regulations. This situation raises serious questions regarding transparency and ethical practices within the cryptocurrency market.
Background on Luna and Its Collapse
Luna was developed by Terraform Labs to support the company’s **TerraUSD stablecoin** in maintaining its peg to the US dollar through an automated trading mechanism. However, in 2022, a significant sell-off by a major **TerraUSD** holder triggered widespread panic in the market. This led to the minting of additional Luna tokens to stabilize the stablecoin, resulting in a drastic drop in Luna’s price.
The Fallout from Terra’s Collapse
Last year, Terraform Labs and its former CEO, **Do Kwon**, reached a **$4.5 billion settlement** with the SEC due to the eventual **$40 billion collapse** of their operations. This catastrophic event had ripple effects throughout the cryptocurrency industry, leading to the failure of **Three Arrows Capital**, which subsequently affected **Genesis Global Capital** and **FTX**.
Galaxy’s Public Support for Luna
During the tumultuous period of Luna’s rise and fall, Galaxy Digital and its CEO, **Mike Novogratz**, publicly expressed their support for the token. Novogratz even pledged on social media to get a tattoo if Luna reached the $100 mark. However, as the settlement reveals, while Novogratz showcased his enthusiasm for Luna through social media, Galaxy was secretly offloading millions of tokens at significantly higher prices than their initial cost.
Key Findings from the Settlement
The settlement highlights several critical points:
- Market Manipulation: Galaxy’s actions are said to have contributed to Luna’s price surge from **$0.31 in October 2020** to a peak of **$119.18 in April 2022**.
- Profit from Deception: The company allegedly profited hundreds of millions of dollars while misleading investors about its activities.
This case against Galaxy Digital serves as a reminder of the importance of transparency and ethical practices in the rapidly evolving cryptocurrency landscape. For more information on the implications of this lawsuit, visit SEC’s official website or explore additional insights from CoinDesk.
