Galaxy Digital settles with New York AG for $200M after facing allegations it illegally propped up the LUNA token

New York Attorney General Letitia James alleges Terra founder Do Kwon recruited Galaxy Digital to purchase LUNA tokens and advocate for his project in the West.

Crypto investment giant Galaxy Digital has settled with the New York State Attorney General for $200 million after facing allegations that it illegally propped up the ill-fated LUNA token.

New York Attorney General Letitia James alleges Terra founder Do Kwon recruited Galaxy Digital to purchase LUNA tokens and advocate for his project in the West.

James says the investment firm, which did not admit or deny the AG’s allegations, bought 18.5 million Luna from Terraform Labs in October 2020 at $0.22 per token, a nearly 30% discount to the asset’s then-market price of $0.31.

“As Michael Novogratz, Galaxy’s founder and chief executive officer, later said, Galaxy helped ‘kickstart’ interest in Luna through its marketing efforts. Galaxy began posting about Luna and Terraform on social media in November 2020, and Luna’s price and trading volume rose. On March 26th, 2021, when Luna was trading around $18 per token, Novogratz posted on social media that he would get a Luna tattoo if Luna’s price reached $100. Luna hit $100.84 on December 24th, 2021, and on January 4th, 2022, Novogratz publicly unveiled his Luna tattoo on social media.

But while Novogratz posted pictures of his tattoo and expressed his Luna bullishness to the public, Galaxy sold millions of tokens into the market at many multiples of its initial cost without disclosing that it was selling.”

James notes that Galaxy Digital had almost completely exited its LUNA position by the time the Terra ecosystem imploded in May 2022.

Kwon was arrested in Montenegro in 2023 while attempting to board a flight to Dubai using a fake Costa Rican passport.

The South Korean software engineer is facing fraud charges in both the United States and his native country, but Montenegrin authorities decided to extradite him to the US in December.

Kwon faces a maximum penalty of 130 years in prison, and his trial is currently scheduled for January 2026.

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