Galaxy Digital Settles $200M LUNA Lawsuit with New York Attorney General
New York Attorney General Letitia James and Mike Novogratz’s Galaxy Digital have reached a $200 million settlement over alleged violations related to the promotion of the now-collapsed cryptocurrency TerraLuna (LUNA).
Galaxy Digital’s Alleged Role in LUNA’s Collapse
According to the settlement agreement, Galaxy Digital promoted LUNA as a strong investment opportunity while secretly liquidating its own multi-million dollar holdings. The Assurance of Discontinuance, notarized on March 24, outlines how Galaxy’s endorsements were pivotal in LUNA’s rise among U.S. investors, even though the project was primarily based in South Korea.
“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 settlement stated.
The firm reportedly helped drive LUNA’s price from $0.31 in October 2020 to an all-time high of $119.18 in April 2022 while profiting hundreds of millions of dollars. The NYAG argued that these actions violated New York’s Martin Act and Executive Act, as Galaxy failed to comply with disclosure requirements. However, Galaxy Digital neither admitted nor denied any wrongdoing as part of the settlement.
The Wider TerraLuna Fallout
LUNA was a core component of the Terra ecosystem, which also included the algorithmic stablecoin TerraUSD (UST). The system collapsed in May 2022, wiping out an estimated $40 billion in investor funds and triggering the bankruptcy of several major crypto firms, including BlockFi and Three Arrows Capital.
Terraform Labs co-founder Do Kwon was arrested in Montenegro after an Interpol red notice was issued against him. He was sentenced to four months in jail for travel document forgery and is expected to stand trial in the U.S. in January 2026 following his extradition in December 2024.
Meanwhile, Terraform Labs has agreed to a record $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC). The firm, which is currently in the process of dissolving, will distribute its remaining assets through a bankruptcy plan. A March 28 notice confirmed that the Terraform Labs Creditors’ claims portal would open on March 31, with the company owing at least $4.65 billion in liabilities against estimated assets of $500 million.