- Galaxy Digital to pay $200M after promoting Terra without disclosure.
- Settlement resolves claims of market manipulation and false disclosures.
- Settlement will be paid over three years, starting with $40M.
As part of its settlement with the New York Attorney General Galaxy Digital has agreed to pay $200 million. The settlement results from accusations about Galaxy Digital’s role in undisclosed promotion of collapsed cryptocurrency Terra (LUNA). The company allegedly deceived investors through false statements about how the project operated and its connection with South Korean application Chai.
LUNA Collapse
The documents submitted on March 24, 2025 showed that Galaxy Digital acquired 18.5 million LUNA tokens at a price that was 30% below market value. Terraform Labs supplied the tokens to Galaxy Digital in October 2020. The promotional activities conducted by Galaxy triggered an immense price growth which propelled LUNA from $0.31 to $119.18 between October 2020 to April 2022.
The filed documents indicate that Galaxy Digital did not disclose to the public the LUNA tokens sales. Additionally, the company published false reports which indicated that Terra blockchain operated within the Chai system. The statements emerged from false information provided by Terraform Labs and its founder Do Kwon.
The Terra collapse in May 2022 resulted in huge financial losses such as the loss of billions of dollars in market capitalization. The collapse triggered a failure in the TerraUSD (UST) stablecoin stabilization mechanism which led to loss of value in LUNA This event led to a collapse in the cryptocurrency market.
Galaxy Digital Settlement
Michael Novogratz, CEO of Galaxy Digital, described the settlement as a difficult decision. Novogratz declared that this agreement would enable the company to concentrate on long-term development of digital assets and artificial intelligence. This settlement resolves claims about market manipulation and failure to properly disclose information.
The promotional efforts by Galaxy Digital artificially raised the price of LUNA tokens. The company sold its entire token ownership but did not share the disclosures with its investors. The settlement requires Galaxy to distribute $200 million over three years with detailed payment timelines for the next few years.
The payment terms of Galaxy Digital require an initial $40 million installment which must be paid within the first 15 days. Another $40 million must be paid within a year from the first payment. The rest will be paid on annual installments of $60 million each for the next for the second and third years. The settlement addresses legal disputes which enables Galaxy Digital to proceed with its business goals.