Key Takeaways
- • Galaxy Digital Holdings, led by Michael Novogratz, agreed to pay an undiscounted $200 million penalty to the New York Attorney General to resolve civil claims over its promotion of the Luna cryptocurrency between late 2020 and 2022.
- • Galaxy booked a legal provision of $166 million in its full-year results, reflecting the discounting effect of installment payments running through 2028.
- • Galaxy did not admit or deny wrongdoing; the NYAG alleged it promoted Luna without disclosing its intent to sell while profiting from price gains of several hundred million dollars, and sold nearly all its Luna holdings before the May 2022 collapse.
- • Galaxy reported fourth-quarter 2024 net income of $174.5 million, down from $301.5 million a year earlier, including the settlement's impact.
- • The settlement arrives as US regulators have dropped or paused many crypto enforcement actions, including SEC cases against Kraken, Consensys and Cumberland DRW.
Summary
Galaxy Digital Holdings, the firm founded and led by Michael Novogratz, will pay $200 million in penalties to the New York Attorney General to resolve civil claims tied to its role in promoting Terraform Labs' Luna cryptocurrency, according to Bloomberg. The agreement was reached on Thursday and disclosed in Galaxy's earnings statement on Friday. The claims covered certain investments, trading and public statements Galaxy made regarding Luna between late 2020 and 2022.
The penalty is undiscounted and payable in installments through 2028. In its full-year results, Galaxy recorded a legal provision of $166 million to cover the fine, citing the effect of discounting. Galaxy did not admit or deny wrongdoing, according to the NYAG filing. The attorney general's office alleged that Galaxy violated rules by promoting an asset without disclosing its intent to sell it, and that the firm profited from Luna's price rise by hundreds of millions of dollars while Novogratz publicly promoted the token. Galaxy sold nearly all of its Luna holdings before the crash, the NYAG said.
Luna and its sister stablecoin TerraUSD, which relied on algorithmic trading to maintain its peg, collapsed to near zero in mid-2022, erasing more than $40 billion in market value. The collapse triggered bankruptcies, fraud revelations and wider scandal across the crypto industry. In a statement to Bloomberg, Novogratz said the decision was not easy and that Terraform founder Do Kwon and Terraform 'deceived us and many other prominent institutional investors.' He added that Galaxy had cooperated fully with regulators, including the New York Attorney General.
Galaxy reported fourth-quarter net income of $174.5 million, compared with $301.5 million a year earlier, and said the figure included the settlement's impact. The resolution also comes as US authorities have dropped or paused many long-running crypto enforcement actions, including SEC lawsuits against Kraken and Consensys and an action involving Cumberland DRW, as the agency works to restore a clearer regulatory framework for the sector.
The penalty is undiscounted and payable in installments through 2028. In its full-year results, Galaxy recorded a legal provision of $166 million to cover the fine, citing the effect of discounting. Galaxy did not admit or deny wrongdoing, according to the NYAG filing. The attorney general's office alleged that Galaxy violated rules by promoting an asset without disclosing its intent to sell it, and that the firm profited from Luna's price rise by hundreds of millions of dollars while Novogratz publicly promoted the token. Galaxy sold nearly all of its Luna holdings before the crash, the NYAG said.
Luna and its sister stablecoin TerraUSD, which relied on algorithmic trading to maintain its peg, collapsed to near zero in mid-2022, erasing more than $40 billion in market value. The collapse triggered bankruptcies, fraud revelations and wider scandal across the crypto industry. In a statement to Bloomberg, Novogratz said the decision was not easy and that Terraform founder Do Kwon and Terraform 'deceived us and many other prominent institutional investors.' He added that Galaxy had cooperated fully with regulators, including the New York Attorney General.
Galaxy reported fourth-quarter net income of $174.5 million, compared with $301.5 million a year earlier, and said the figure included the settlement's impact. The resolution also comes as US authorities have dropped or paused many long-running crypto enforcement actions, including SEC lawsuits against Kraken and Consensys and an action involving Cumberland DRW, as the agency works to restore a clearer regulatory framework for the sector.
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