Galaxy Digital has reached a $200 million settlement with the New York Attorney General (NYAG) over claims the crypto investing company promoted the now collapsed Luna digital asset without disclosing its interest in the token.
A filing posted by the NYAG accuses Galaxy with violating the Martin Act and the Executive Law over its alleged role in the collapse of Luna.
Galaxy allegedly acquired 18.5 million Luna tokens at a 30% discount before promoting them and selling them without following disclosure rules.
Luna was created by Terraform Labs to help the company's TerraUSD stablecoin stay pegged to the US dollar through an automated buying and selling programme.
However, In 2022, when a major holder of TerraUSD made a big sell off, a market panic ensued, prompting the minting of Luna tokens to buy back the stablecoin, leading to Luna's price dropping.
Last year, Terraform Labs and its former CEO Do Kwon reached a $4.5 billion settlement with the SEC over the eventual $40 billion collapse of the company and its ecosystem.
Terra's implosion also set off a series of devastating events for the crypto industry, causing the failure of crypto hedge fund Three Arrows Capital which, in turn, hit Genesis Global Capital and FTX.
As Galaxy and its boss Mike Novogratz were publicly backing Luna - Novogratz promised on social media to get a tattoo if it broke $100 - the company was selling.
Says the settlement: "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."
In continues: "Ultimately, Galaxy helped a little-known token increase its market price from $0.31 in October 2020 to $119.18 in April 2022, while profiting in the hundreds of millions of dollars."