Galaxy Digital Settles With NYAG For $200M Over LUNA Promotions

Galaxy Digital, a prominent crypto investment firm led by Michael Novogratz, has reached a significant settlement with the New York Attorney General's office. The agreement requires Galaxy Digital to pay $200 million over a span of three years, with an initial payment of $40 million due within two weeks. This settlement stems from allegations that Galaxy Digital promoted the algorithmic cryptocurrency LUNA while simultaneously selling millions of tokens at a profit, actions that occurred before the token's collapse in May 2022.

The New York Attorney General's office claims that Galaxy Digital purchased 18.5 million LUNA tokens at a discounted rate in 2020. The firm then promoted LUNA to the public while quietly selling its holdings in tranches, making over $100 million by March 2022. This behavior allegedly violated the Martin Act and New York Executive Law, as Galaxy did not disclose its intent to sell the tokens. The NYAG's filing highlights that Novogratz was one of LUNA’s most vocal supporters, admitting that Galaxy played a role in "kickstarting" interest in the token through its marketing efforts.

The settlement agreement outlines that Galaxy Digital will implement new policies to prevent conflicts of interest. These policies include legal analysis of token investments and promotional statements, ensuring transparency and compliance with regulatory standards. The firm has not made any public statements regarding the settlement as of the latest information available.

This settlement underscores the increasing scrutiny that cryptocurrency firms face from regulatory bodies. It serves as a reminder of the importance of transparency and compliance in the rapidly evolving digital asset market. Galaxy Digital's actions, as alleged by the NYAG, highlight the potential risks associated with promoting and trading cryptocurrencies without proper disclosure. The firm's agreement to pay $200 million and implement new policies demonstrates a commitment to rectifying past practices and adhering to regulatory requirements.