SkyBridge Capital Founder Anthony Scaramucci Calls New York State Attorney General's (NAYG) Recent Legal Action Against Galaxy Digital Over Its Promotional Ties to the Now-Collapsed Cryptocurrency Terra (LUNA)

The New York State Attorney General's (NAYG) recent legal action against Galaxy Digital over its promotional ties to the now-collapsed cryptocurrency Terra (LUNA)

Recently, New York State Attorney General (NAYG) took legal action against Galaxy Digital for its promotional ties to the now-collapsed cryptocurrency Terra (LUNA), a move which SkyBridge Capital founder Anthony Scaramucci described as unfair and an abuse of the legal system.

“It’s LAWFARE, pure and simple due to an obscure but dangerously powerful New York law known as the Martin Act,” Scaramucci said in a March 28 X post.

Martin Law can “open the door for abuse”

“The law has no need to prove intent, creating a low standard of proof that can open the door for abuse like this. It shouldn’t exist,” he said.

New York’s Martin Act is one of the US’s strictest anti-fraud and securities laws, granting prosecutors the authority to pursue financial fraud cases without needing to demonstrate intent. The NAYG alleged that Galaxy Digital violated the Martin Act with its alleged promotion of Terra, leading Galaxy Digital to agree to a $200 million settlement.

According to NAYG documents filed on March 24, Galaxy Digital obtained 18.5 million LUNA tokens at a 30% discount in October 2020, later promoting them before selling them without adhering to disclosure rules.

Scaramucci mentioned that Galaxy CEO Michael Novogratz was under the impression that everything he was saying about Luna was true, as he had been deceived by Terraform Labs and its former CEO, Do Kwon.

This point was in response to a statement by crypto asset manager and investor Anthony Pompliano, who said he isn’t familiar with the details of the lawsuit but vouched for Novogratz, calling him a “good man” who has devoted a lot of time and money to helping others.

The Terra collapse is one of the crypto industry’s most infamous failures. In March 2024, SEC attorney Devon Staren said in the US District Court for the Southern District of New York that Terra was a “house of cards” that collapsed for investors in 2022.

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