The New York Attorney General has launched an investigation into Galaxy Digital with terms to pay $200 million over its involvement in promoting the LUNA cryptocurrency, whose collapse erased billions in investments.
Investigation and Financial Consequences
The collapse of the Terra blockchain, including its token LUNA, was one of the significant disruptions in the crypto industry in 2022. Terraform Labs founder Do Kwon awaits extradition to the US to face fraud and securities violation charges. Galaxy Digital has agreed to pay $200 million over three years as settlement and commit to policy changes to prevent similar future incidents.
Galaxy Digital's Role in Promoting LUNA
According to documents, Galaxy Digital purchased LUNA at a favorable price and began actively promoting it. Galaxy Digital's founder, Michael Novogratz, publicly supported the project, which increased interest and raised the token's price. By the time the price hit $100, he even got a tattoo in honor of LUNA.
Allegations against Galaxy Digital
Investigations revealed that while the company was promoting LUNA, it was selling tokens at a higher price without disclosing this. The press releases contained inaccurate information that contributed to the price surge of LUNA.
The collapse of Terra and LUNA continues to have long-term consequences for its participants. Galaxy Digital has imposed a hefty fine and is implementing policy changes to prevent future violations.
