Galaxy Digital Settles with New York AG Over Allegations of LUNA Misconduct

Galaxy Digital has reached a $200 million settlement with the New York Attorney General (NYAG), following allegations the firm failed to disclose its financial interests

Galaxy Digital has reached a $200 million settlement with the New York Attorney General (NYAG) over allegations that the firm failed to disclose its financial interests while promoting the now-collapsed LUNA cryptocurrency.

What Happened: The agreement, revealed through a state filing on Thursday, resolves a case brought under the Martin Act and Executive Law, Axios reported.

The case, first announced in December, focused on Galaxy's actions as it supported the Luna Foundation, a non-profit linked to Terraform Labs' LUNA and TerraUSD (UST) project.

According to the filing, Galaxy secured a deal to buy 18.5 million LUNA tokens at a substantial discount, set to be released monthly throughout a year. In exchange, Galaxy would promote LUNA and assist in market-making activities.

However, despite publicly expressing support for LUNA—including CEO Mike Novogratz's tattoo commemorating the token's price rise—Galaxy silently sold the majority of its holdings, realizing over $100 million in profits by early 2022.

The settlement also claims that Galaxy played a key role in amplifying LUNA's value, aiding its climb from $0.31 in late 2020 to a peak of $119.18 in April 2022.

By March of that year, Galaxy had divested most of its position while continuing to promote the asset.

The agreement includes several compliance measures designed to prevent future conflicts of interest. These measures mandate legal reviews of token investments and greater transparency around any promotional activities or staff-related holdings.

Galaxy has neither admitted nor denied the allegations, and neither the firm nor the NYAG have yet to comment since the settlement's publication.

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The company is set to release its annual earnings later this week.

The settlement follows a series of enforcement actions stemming from the LUNA crash. Terra Labs and its founder Do Kwon, currently detained in Montenegro, previously settled with U.S. authorities for $4.7 billion.

A market-making firm tied to the case, Jump Crypto, paid $123 million in a separate settlement.