The crypto world just got another reminder that what goes up must come down—sometimes with a hefty price tag. Galaxy Digital, the crypto investment giant led by Michael Novogratz, has agreed to cough up $200 million to settle a case with the New York Attorney General’s Office (NYAG) over its role in promoting LUNA, the infamous cryptocurrency tied to the collapsed TerraUSD (UST) stablecoin.
So, what happened? Let’s break it down. 🚀
📉 The Rise and Fall of LUNA
Back in 2022, Terraform Labs launched TerraUSD (UST), an algorithmic stablecoin that aimed to maintain a 1:1 peg with the U.S. dollar. It worked in tandem with its sister token, LUNA, in a complex system that promised stability. For a while, it seemed like the ultimate DeFi success story. 🌟
Investors flocked to LUNA, and its value skyrocketed. Galaxy Digital was among the big names backing the project, participating in a funding round that raised over $200 million. Novogratz himself was one of its loudest cheerleaders, even declaring that he’d get a LUNA tattoo if the token hit $100. Spoiler alert: he did. 😬
Then, in May 2022, disaster struck. The entire Terra ecosystem collapsed, wiping out $40 billion in investor funds and sending shockwaves through the crypto industry.
💰 Galaxy Digital’s Role—and the Fallout
Galaxy Digital was not just an investor—it actively promoted LUNA. However, reports indicate that the firm cashed out most of its LUNA holdings before the crash, securing massive profits while everyday investors were left holding the bag. 😡
The NYAG took issue with this, launching an investigation into whether Galaxy Digital misled investors by hyping up LUNA without disclosing its own financial interests. As a result, the company agreed to a $200 million settlement, paid out over three years. The first chunk, $40 million, is due in just a few weeks. Importantly, Galaxy Digital did not admit to any wrongdoing.
⚖️ What This Means for Crypto
This case sends a clear message: crypto firms can no longer hype up projects without transparency. With regulators tightening their grip, the industry is entering a new era of accountability. If you’re promoting an asset, you better be upfront about your stake in it.
For Galaxy Digital, this is a costly lesson—but for the crypto community, it’s a wake-up call. As regulators continue cracking down, the days of unchecked influencer marketing in crypto may be numbered. 🕵️♂️
🔮 The Road Ahead
With this chapter closing, Galaxy Digital will likely focus on damage control and future investments. As for Novogratz’s LUNA tattoo? Well, that’s probably not going anywhere—just like the memory of this high-profile crypto crash. 🏴☠️
