Michael Novogratz’s Galaxy Digital has agreed to pay $200 million to settle allegations from the New York Attorney General (NYAG) regarding its role in promoting and profiting from the Terra-LUNA ecosystem before its collapse in 2022.
The NYAG accused Galaxy of violating the Martin Act by promoting LUNA tokens without proper disclosure of its financial interests. Galaxy acquired 18.5 million LUNA tokens at a discounted rate and allegedly sold them while endorsing the project publicly. Terra’s algorithmic stablecoin UST and its sister token LUNA lost $60 billion in value, triggering financial losses and bankruptcies across the crypto industry. Galaxy will pay the settlement in installments over three years: $40 million within 15 days, another $40 million within one year, and two payments of $60 million in subsequent years.
Despite the settlement, Galaxy reported strong profits for 2024: $174 million in Q4 and $365 million for the year, even after factoring in legal provisions. The Terra ecosystem was created by Do Kwon, who is currently detained in Montenegro awaiting extradition to face fraud charges in the U.S. Galaxy Digital’s promotion of LUNA included claims about its use in South Korean payment app Chai—claims later revealed to be false. Galaxy’s settlement comes amid tightening regulatory scrutiny of crypto firms linked to high-profile collapses like Terra and FTX. Shares of Galaxy Digital fell 3.54% following the announcement.
This case highlights growing accountability for crypto firms involved in promoting risky projects without transparency.