Mike Novogratz’s Galaxy Digital Agrees to $200M Fine in LUNA Manipulation Case

Michael Novogratz’s Galaxy Digital has agreed to settle a LUNA market manipulation case brought by the New York Attorney General’s Office.

On Thursday, March 27, Galaxy Digital agreed to pay an undiscounted $200 million fee to settle claims that all the while it was promoting the ill-fated LUNA token, it was offloading its holdings without proper disclosure in violation of anti-fraud laws. 

Galaxy Digital and Novogratz played major roles in promoting the Terra ecosystem. The latter famously followed through with a LUNA tattoo after the token’s price crossed $100.

As such, it is perhaps unsurprising that prosecutors all but blame Novogratz and Galaxy Digital for the success of LUNA and its sister token, the defunct algorithmic stablecoin TerraUSD, in the U.S.

Galaxy Promoted LUNA Without Proper Disclosure

Per the filing, Galaxy Digital entered a deal to promote LUNA in 2020 in exchange for an opportunity to purchase the token at $0.22, 30% below its market value of $0.31 at the time.

Through this deal, the firm purchased 18.5 million LUNA for $4 million, which unlocked on a monthly vesting schedule for one year, the filing said.

Prosecutors claim that the price of LUNA started soaring as Galaxy Digital began this promotion. They claim that with this price rise, the firm sold its holdings for hundreds of millions in profit without disclosing.

Notably, Galaxy Digital did not admit or deny any wrongdoing. However, the firm alluded to the settlement in its Q4 financial results published today, March 28. It asserted that it still had a profit of $174 million in Q4 2024 and $365 million for the full year after factoring in the case settlement fee, disclosing that it would be paying a discounted fee of $166 million in reality.

The collapse of the Terra ecosystem in 2022 left a $60 billion hole in the crypto market, which eventually triggered a wave of bankruptcies across the industry.