Galaxy Digital’s $200M Oopsie: When Crypto Promotions Go Kaboom! 💥

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In a move that could only be described as “boldly going where no crypto firm should,” Michael Novogratz’s Galaxy Digital has agreed to cough up a cool $200 million. Why? Because apparently, promoting a cryptocurrency that went *poof* isn’t exactly legal. Who knew? 🤷‍♂️

According to the New York Attorney General’s Office, Galaxy Digital snagged 18.5 million LUNA tokens at a 30% discount, then proceeded to hype them up like they were the next sliced bread. The kicker? They sold them without bothering to tell anyone they were cashing in. The filing, dripping with bureaucratic sarcasm, stated:

“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.”

As part of the settlement, Galaxy will be paying $200 million over three years. That’s $40 million within 15 days, another $40 million within a year, and two more payments of $60 million each in the second and third years. Because nothing says “we’re sorry” like a multi-year installment plan. 💸

Galaxy Digital’s Fake News Extravaganza

But wait, there’s more! The filing also accused Galaxy Digital and Novogratz of spreading some rather creative “facts” about Terra’s usage. Specifically, they claimed that the South Korean payments app Chai was built on the Terra blockchain. Spoiler alert: it wasn’t. 🚨

This little fib was also included in a press release sent to Bloomberg, which boasted that the app “hosts over 2 million users and generates $1.2 billion in annualized transaction volume.” The release, now dripping with irony, reads:

“These statements were false. They were based on representations by Kwon and Terraform to Galaxy, but Galaxy failed to independently verify them.”

Terra’s Collapse: A Masterclass in Market Mayhem

Terra and its algorithmic stablecoin, TerraUSD (UST), both took a nosedive in May 2022. The cause? A breakdown in the mechanism designed to keep UST pegged to the US dollar. It all started when a big player decided to sell a boatload of UST. 🚢

This triggered a market panic, causing UST to lose its peg. The mechanism meant to stabilize UST involved minting new LUNA tokens to buy back UST, which led to a massive increase in LUNA supply. This, in turn, put intense downward pressure on LUNA’s price. 📉

As CryptoMoon reported at the time, if LUNA’s market cap fell below that of UST, there wouldn’t be enough funds to maintain the stablecoin’s peg. With LUNA losing value as its supply ballooned, the assets entered a self-reinforcing death spiral, wiping out nearly all their value in hours. 💀

This wiped out billions in market capitalization and triggered a broader cryptocurrency market downturn. The memory of the event is still fresh, with the Sonic blockchain’s recent unveiling of a high-yield algorithmic stablecoin being met with fears due to perceived similarities. Because, you know, history never repeats itself. 😬

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2025-03-28 15:28