Galaxy Digital, one of the most prominent firms in the crypto space, has agreed to a $200 million settlement with the New York Attorney General’s Office. The company faced allegations of concealing its financial interests while heavily promoting the LUNA token during the explosive rise of the Terra ecosystem.
The investigation centered on Galaxy’s failure to disclose that it had accumulated large amounts of LUNA at discounted prices before initiating aggressive marketing efforts that may have influenced the token’s rapid price appreciation. Prosecutors claim these actions misled the public and triggered significant market volatility.
Hidden Gains and Undisclosed Incentives
The Attorney General’s office alleges that Galaxy Digital purchased 18.5 million LUNA tokens at favorable prices as early as 2020, and later offloaded these holdings in phases as the token surged in value. These sales reportedly generated over $100 million in profit, all while the company remained publicly silent about its positions.
Although Galaxy Digital has not admitted wrongdoing, it agreed to the settlement to resolve the matter. Regulators labeled the conduct a breach of transparency and market integrity, particularly as the token rose from $0.31 in October 2020 to $119.18 by April 2022, before its eventual crash.
Regulators Intensify Focus on Market Manipulation
The fallout from the LUNA collapse was wide-reaching, contributing to broader failures such as FTX, Celsius, and 3AC. This latest development reinforces how critical transparency is during promotional campaigns for volatile crypto assets.
According to Dey There, Galaxy’s promotional role during LUNA’s rise has sparked renewed scrutiny from regulators over how institutional players shape price trends. These events serve as a reminder that crypto markets are not immune to legal accountability.
Michael Novogratz, founder of Galaxy Digital, has remained vocal on evolving regulatory frameworks in the U.S., recently stating that Bitcoin’s growing global acceptance reflects a shifting institutional landscape. Still, the LUNA episode underscores how quickly momentum can turn into liability when oversight is lacking.
LUNA Struggles to Recover as Sentiment Wanes
In recent trading, the LUNA token has dropped nearly 7% in the past 24 hours, returning to its weekly lows. Despite renewed interest in regulatory compliance across the sector, investor sentiment around LUNA remains subdued.
As regulators grow more aggressive, industry players must adapt to a new era of compliance and disclosure. The Galaxy Digital case may well become a cautionary tale for other firms navigating high-stakes promotions in decentralized markets.
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