Catenaa, Thursday, April 10, 2025- GALAXY DIGITAL Holdings Ltd has been fined $200 million by the Office of the Attorney General (OAG) of New York for alleged market manipulation surrounding the cryptocurrency Luna. The investigation, conducted under the Martin Act, concluded that Galaxy used deceptive trading practices by promoting Luna while secretly offloading its holdings, a move that violated state securities laws.
Galaxy, led by CEO Michael Novogratz, began acquiring Luna in 2020 at a discounted rate of $0.22 per token from Terraform Labs.
The firm used its influence to boost Luna’s price, peaking at $119.18 in April 2022, while secretly selling off its holdings, making substantial profits. This manipulation continued until Luna’s collapse in May 2022, which wiped out over $40 billion in market value and left retail investors facing severe losses.
The OAG’s investigation revealed that Galaxy facilitated misleading media coverage and endorsements to drive up Luna’s value, all while offloading tokens to secure massive financial gains.
Despite public statements encouraging investors to “keep the faith,” the firm was quietly liquidating its position, ensuring minimal exposure when the collapse occurred.
As a result of the fine, Galaxy Digital is now required to implement stricter compliance measures to prevent future misconduct.
The case has also heightened regulatory scrutiny of crypto firms, with a renewed focus on transparency and promotional practices. Galaxy’s reputation has taken a significant hit, and further legal consequences could follow for key figures like Novogratz.
