Michael Novogratz’s Galaxy Digital will pay $200 million over allegations it promoted LUNA while selling millions of tokens at a profit before the token’s collapse.
Galaxy Digital, a crypto investment firm founded by Michael Novogratz, has agreed to a $200 million settlement with the New York Attorney General’s office over allegations it promoted the algorithmic cryptocurrency LUNA (LUNA) while quietly selling millions of tokens at a profit. The firm did not admit or deny the allegations.
The settlement, outlined in a filing from the NYAG, claims Galaxy bought LUNA in 2020. At the same time, it promoted and sold its holdings without disclosing its intent to sell, thereby violating the Martin Act and New York Executive Law, according to the NYAG.
In the settlement agreement, the regulator says Michael Novogratz was among LUNA’s most vocal supporters, admitting in a moment that Galaxy “helped ‘kickstart’ interest in Luna through its marketing efforts.”
While publicly expressing confidence in LUNA, Galaxy queitly sold “millions of tokens into the market at many multiples of its initial cost without disclosing that it was selling,” the filing reads.
Galaxy reportedly bought 18.5 million LUNA tokens at a discount and sold most of them in tranches, making over $100 million by March 2022. By the time LUNA collapsed in May 2022, Galaxy had already exited almost its entire position. “Ultimately, Galaxy helped a little-known token increase its market price from $0.31 in October 2020 to $119.18 in April 2022, while profiting in the hundreds of millions of dollars,” the NYAG claims.
Under the settlement, Galaxy will pay $200 million over three years, starting with $40 million in two weeks. The firm also agreed to implement policies to prevent conflicts of interest, including legal analysis of token investments and promotional statements. As of press time, Galaxy Digital made no public statements on the matter.
