Galaxy {Digital} Settles LUNA Promotion Case with NYAG for $200M

Key Notes

• Galaxy {Digital} is ready to pay a $200 million settlement to the NYAG for allegedly LUNA token promotion.
• The agency is accused of deceptive buyers by hyping LUNA publicly whereas secretly promoting thousands and thousands of tokens for revenue.
• The settlement, signed on March 24, requires Galaxy to pay the primary $40 million installment inside two weeks
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Crypto funding big Galaxy {Digital} Holdings Ltd (TSE: GLXY) has agreed to pay a $200 million settlement to the New York Legal professional Basic’s Workplace (NYAG) over allegedly selling the LUNA token. Galaxy faces accusations of violating New York’s Martin Act and Govt Regulation by selling LUNA with out disclosing its holdings and gross sales of the asset.

The submitting claims that whereas Galaxy {Digital} publicly hyped LUNA’s potential, it privately dumped thousands and thousands of tokens, profiting massively with out informing the general public. The Legal professional Basic’s workplace alleges that this lack of transparency misled buyers, resulting in main losses when LUNA collapsed in Might, 2022.

As per a latest report by Axios, the settlement was formally signed on March 24 by each state authorities and Galaxy {Digital} representatives. It outlines a fee plan of $200 million unfold over three years, with the primary $40 million installment scheduled to be paid inside two weeks.

Galaxy has additionally agreed to implement insurance policies geared toward stopping conflicts of curiosity. These measures embody stricter tips on promotional statements and tighter oversight on workers investments. Moreover, the corporate should conduct thorough authorized critiques of all future token transactions.

The LUNA Crash

The LUNA case stays one of the devastating crypto crashes in historical past. The Terra ecosystem, which comprised the LUNA token and its algorithmic stablecoin TerraUSD (UST), relied on a posh stabilization mechanism.

Nevertheless, in Might 2022, UST misplaced its peg to the US greenback, inflicting a demise spiral. UST plummeted to $0.10, whereas LUNA, as soon as valued at $119.5, grew to become almost nugatory. The collapse worn out over $40 billion in market worth.

Galaxy {Digital} CEO Michael Novogratz was considered one of LUNA’s hottest backers. Novogratz even received a wolf-howling-at-the-moon tattoo to rejoice LUNA hitting $100. But, whereas flaunting his bullishness on social media, Galaxy was secretly offloading thousands and thousands of tokens, in accordance with the NYAG’s submitting.

NYAG’s Allegations

The settlement detailed that Galaxy struck a take care of Terraform Labs, the creator of LUNA, to purchase 18.5 million tokens at a 30% low cost to the market value for $4 million. These tokens had been launched in month-to-month batches over the course of a 12 months. Whereas publicly selling LUNA, Galaxy offered nearly all of its holdings in a number of batches, resulting in over $100 million in revenue.

By March 2022, simply earlier than the crash, Galaxy had liquidated almost its whole LUNA place. Even after that, the agency continued selling LUNA with out revealing its token dumping, the submitting alleges.

Notably, on the time of writing, Galaxy has neither admitted nor denied the allegations.This case follows a broader crackdown on LUNA-related misconduct. In late 2024, the US Securities and Change Fee (SEC) reached a $123 million settlement with Soar Crypto, a market-making agency, over related LUNA-related violations.

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