Galaxy Digital Settles $200M Over Terra Promotion Controversy

By: Eliza Bennet

Galaxy Digital, the cryptocurrency investment firm led by Michael Novogratz, has agreed to a significant settlement amid allegations of misleading promotion of Terra (LUNA), a now-defunct cryptocurrency. The New York Attorney General's Office has confirmed that Galaxy Digital will pay $200 million as part of this settlement to address issues that arose from the promotion and subsequent collapse of Terra. This hefty sum will be distributed over three years, with an initial payment of $40 million, followed by another $40 million within a year, and two additional payments of $60 million each in the second and third years.

The settlement stems from accusations that Galaxy Digital acquired a substantial 18.5 million LUNA tokens at a considerable 30% discount, with the firm allegedly promoting these tokens without the appropriate disclosures to potential investors. According to the New York Attorney General, this constituted misrepresentation, impacting investors who might have been misled regarding the true nature of their investments. The settlement marks a pivotal moment in regulatory oversight for Galaxy Digital, emphasizing the need for transparency and adherence to disclosure norms in cryptocurrency promotions.

This agreement comes after widespread concern over the collapse of Terra (LUNA) and its impact on investors and the broader cryptocurrency market. The collapse proffered a stark warning about the risks associated with investing in highly speculative digital assets and underscored the necessity for clear, regulated communication standards within the industry. It highlights the responsibility firms like Galaxy Digital hold in ensuring that promotions are truthful and that they abide by established disclosure rules.