Galaxy Digital Agrees to $200 Million Settlement Over Alleged TerraLuna Violations
New York Attorney General Letitia James and Mike Novogratz’s Galaxy Digital have reached a $200 million settlement regarding alleged violations related to their promotion of the collapsed cryptocurrency TerraLuna.
According to the settlement, Galaxy Digital misrepresented its multi-million dollar exit strategy while publicly endorsing TerraLuna (LUNA) as a promising investment. These endorsements were considered pivotal in Terra’s success in the U.S., especially since the crypto project was mainly based in South Korea. Novogratz, a prominent figure behind Galaxy, was accused of promoting LUNA while secretly selling millions of tokens at substantial profits.
The settlement claims that Galaxy Digital’s actions contributed to LUNA’s surge in market price from $0.31 in October 2020 to $119.18 in April 2022, ultimately profiting in the hundreds of millions of dollars. However, these sales were not disclosed, violating New York’s Martin Act and Executive Act.
The Collapse of LUNA and TerraUSD
LUNA, alongside its sister token TerraUSD (UST), formed the foundation of the Terra ecosystem. The project collapsed in May 2022, resulting in a $40 billion loss and the bankruptcy of major crypto firms, including BlockFi and Three Arrows Capital. The settlement suggests that Galaxy’s undisclosed liquidation of its LUNA position contributed to the eventual collapse.
Legal Consequences and Ongoing Cases
While Galaxy Digital neither admitted nor denied the allegations, the settlement marks a significant legal step in the aftermath of the Terra crash. Do Kwon, Terra’s co-founder, was arrested by Montenegro police on charges of travel paper forgery and is awaiting trial in the U.S. in January 2026. Meanwhile, Terraform Labs, the firm behind Terra, signed a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to disband and proceed with asset liquidation through a bankruptcy distribution plan.
Editorial Team
Reporter at Coindoo
