Galaxy Digital Settles $200M in Luna Token Manipulation Case

Galaxy Digital, a big name in the crypto world led by U.S. billionaire Mike Novogratz, will pay $200 million to end a problem with New York regulators. They were looking into claims that Galaxy messed with the Luna token, a digital coin connected to TerraUSD, a stablecoin that fell apart in 2022 and caused huge trouble in the crypto market.

New Yorks Attorney General said in a report that Galaxy started doing shady things in 2020. They bought Luna tokens cheap—18 of them for just $0.22 each, way less than what others paid—and then told everyone how great Luna was. But behind the scenes, regulators say Galaxy sold a bunch of these tokens without telling anyone, making a lot of money. The report says that in just one week, after Novogratz posted on social media, Galaxy sold 1.3 million Luna tokens and made over $100 million.

The trouble with Luna got noticed after TerraUSD crashed hard in 2022, losing $40 billion and hurting a lot of people who invested. That crash didn‘t just stop with TerraUSD—it caused other big companies, like Sam Bankman-Fried’s FTX exchange, to fail too. Last year, the guy who made TerraUSD, Do Kwon, was sent to the U.S. to face charges like fraud. Regulators also said he was guilty in a separate case.

Mike Novogratz, who used to work at Goldman Sachs and Fortress Investments, helped make Luna look good. In 2021, he said hed get a Luna tattoo if the price hit $100, even though it was only $18 then. When it went over $100, he got the tattoo and showed it off online. “But while Novogratz posted pictures of his tattoo and expressed his Luna bullishness to the public, Galaxy sold millions of tokens into the market at many multiples of its initial cost without disclosing that it was selling,” the report said. Regulators think Galaxy made hundreds of millions and sold most of its Luna before the crash.

Galaxy didnt say they did anything wrong or right but agreed to pay to settle things. Novogratz said, “Do Kwon and Terraform, the creators of Luna, deceived us and many other prominent institutional investors.” He added that Galaxy worked with regulators and only recently finished the deal.

This $200 million fine comes as the U.S. Securities and Exchange Commission (SEC) is easing up on crypto rules. After President Donald Trump took office in January and showed he likes crypto, the SEC stopped or paused cases against big names like Coinbase, Consensys, and Binance. Galaxys settlement stands out in this changing scene.

On another note, Galaxy Digital made $365 million last year because crypto prices like Bitcoin and Ether went up. But they also lost between $275 million and $325 million by March 27 this year when the crypto excitement from Trumps election died down. Bitcoin dropped 14 percent in two months, and Ether fell 45 percent, showing how up-and-down this market can be.

The Luna token mess shows how risky and rewarding crypto can be. For Galaxy Digital, paying $200 million ends a tough time linked to TerraUSD‘s fall. It also shows how tricky it is to be open about what you’re doing in this business. With regulators and investors keeping an eye out, the crypto world keeps moving through rough waters.