Galaxy to pay $200M to New York over alleged LUNA manipulation

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens

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Michael Novogratz’s Galaxy has been ordered to pay New York State $200 million after it was accused of market manipulation.

A legal filing from this morning accuses the firm of manipulating the price of luna, the token tied to the now-failed algorithmic stablecoin Terra. 

“This was not an easy decision and one that we considered carefully. Settling this matter will help Galaxy move forward and minimize distractions so that we can focus on our mission of driving innovation and growth in digital assets and artificial intelligence infrastructure,” Galaxy’s Michael Novogratz said in a statement. 

Back in 2020, the legal filing claims, Terra founder Do Kwon sought out Galaxy to help purchase and promote Luna tokens. 

“Galaxy bought more than 18.5 million LUNA from Terraform in October 2020 at $0.22 per token, a nearly 30% discount to LUNA’s then-market price of $0.31 and began endorsing Luna,” the filing said. 

But, after Novogratz got his Luna tattoo once the price hit $100, Galaxy was quietly selling LUNA without disclosing the sales to the public. 

“Galaxy helped a little-known token increase its market price from $0.31 in October 2020 to $119.18 in April 2022.”

The filing claims that Galaxy and Luna went back and forth before beginning their business relationship, given that Galaxy sought to understand any potential use cases for Luna. 

“Galaxy met with Terraform’s co-founders, reviewed Terraform’s public materials — including its white papers and public posts, spoke to node operators to confirm blockchain activity, reviewed blockchain data on the Terra blockchain explorer, and conducted background checks on Terraform’s co-founders,” the document said. 

The offer Terra put on the table was simple: a 30% discount to market price, with tokens vesting monthly over the next year. Galaxy received a total of 18 million tokens, with Terra handing over 1/12 of those each month during that timespan. 

Galaxy’s “Vice President explained that this was better than prior deals Terraform had offered to other investors. It meant Galaxy would be able to sell its LUNA when it received them each month.”

The signed agreement has Galaxy investing $4 million in exchange for a 30% discount to the spot price of luna — which was around $0.31 at the time. In total, Galaxy purchased 18,513,120 LUNA at $0.22 per token.

Lawyers laid out in the filing that Novogratz was quick to start endorsing Luna, misleading investors into thinking that they could make Luna transactions on Chai, which wasn’t true. Through press, Novogratz continued to promote Luna and the price quickly began climbing. 

But behind the scenes, Galaxy was selling off its luna. 

“On March 2, 2021, Terraform issued the fourth tranche of 1,542,764 LUNA to Galaxy, and on March 3, Galaxy sold all 1,542,764 LUNA at prices between $7.35 and $7.70.”

The settlement announcement coincided with Galaxy’s earnings, which were announced Friday. 

“We only recently became aware that the NY attorney general was going forward with this matter, which led to settlement discussions that culminated with the outcome today,” a Galaxy spokesperson explained to Blockworks.

Updated March 28, 2025 at 10:03 am ET: Added comment from Galaxy.


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