In a puzzling development, two prominent crypto figures have voiced contrasting opinions over the settlement deal between Galaxy Digital and the Office of the New York Attorney General (NYAG). On March 28, it was revealed the crypto investment firm led by Michael Novogratz has struck agreements to pay a $200 million fine to the State of New York over the promotion of the now-defunct Terra (LUNA) token.
In an assurance of discontinuance statement, the NYAG stated that Galaxy Digital purchased 18.5 million LUNA from Terraform labs under the leadership of Do Kwon at a 30% discount from the market price in 2020. Thereafter, the NYAG claimed that Digital Galaxy actively participated in driving the market demand that pushed LUNA’s value from $0.31 in October 2020 to $119.18 in April 2022, while actively selling its holdings for profit.
Unfortunately, the LUNA market crashed in May 2022 wiping off $40 billion in investments from the crypto market. The NYAG explains that Galaxy Digital’s misconduct in its promotion of LUNA combined with non-disclosure of its selling actions violates the New York Martin Act and certain sections of the New York Executive Law.
Case Against Galaxy Digital Is Simply Lawfare, Scaramucci Says
In reaction to news of Galaxy Digital’s settlement with the NYAG, founder of SkyBridge Capital and popular Bitcoin advocate Anthony Scaramucci has expressed heavy displeasure. Scaramucci has backed Michael Novogratz and Galaxy Digital, stating their promotions of LUNA were based on information and assurances provided by Terraform Labs.
The former Goldman Sachs Executive has described the recent actions by the NYAG as lawfare i.e. use of legal systems to intimidate a company or entity.
Scaramucci said:
This makes no sense and is completely at odds with the SEC and DOJ which have been pursuing actions against Do Kwon and Terraform. It’s LAWFARE pure and simple due to an obscure but dangerously powerful New York law known as the Martin Act. The law has no need to prove intent creating a low standard of proof that can open the door for abuse like this. It shouldn’t exist.
However, Mike Belshe, CEO of crypto exchange BitGo, has disagreed with Scaramucci stating the NYAG presented a credible case based on the pump-and-dump pattern seen in Galaxy Digital’s action. While Belshe kicks against over-regulation as seen in the hefty penalty fine being imposed, he emphasizes the need for appropriate behavior among crypto market leaders driven by principle-based regulation.
Crypto Market Overview
In other news, the crypto market is valued at $2.65 trillion following a 2.17% decline in the past week. Bitcoin remains the market leader with a 61.2% dominance followed by Ethereum (8.2%) and other altcoins (30.5%).
Featured image from Sportsfile, chart from Tradingview
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