Insights from Industry Experts on Galaxy Digital’s Settlement with NYAG
Conflicting Opinions on Galaxy Digital’s Settlement Agreement
In a surprising turn of events, two influential figures in the cryptocurrency world have expressed differing views regarding the settlement reached between Galaxy Digital and the Office of the New York Attorney General (NYAG). On March 28, it became public knowledge that Galaxy Digital, a crypto investment firm headed by Michael Novogratz, agreed to pay a $200 million penalty to the State of New York. This fine relates to the firm’s promotion of the now-defunct Terra (LUNA) token. According to an assurance of discontinuance statement, the NYAG highlighted that Galaxy Digital acquired 18.5 million LUNA tokens from Terraform Labs, led by Do Kwon, at a 30% discount in 2020. Subsequently, the NYAG accused Galaxy Digital of manipulating market demand, which inflated LUNA’s value from $0.31 in October 2020 to $119.18 in April 2022, while the firm profited by selling its holdings. The dramatic collapse of the LUNA market in May 2022 resulted in a loss of $40 billion in investments from the crypto ecosystem. The NYAG asserts that Galaxy Digital’s actions, coupled with a lack of transparency regarding its sales, violated the New York Martin Act and specific provisions of the New York Executive Law.
Anthony Scaramucci Criticizes Legal Action Against Galaxy Digital
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Reacting to the announcement of Galaxy Digital’s settlement with the NYAG, Anthony Scaramucci, founder of SkyBridge Capital and a well-known Bitcoin supporter, expressed strong disapproval. He defended Michael Novogratz and Galaxy Digital, arguing that their promotions of LUNA were grounded in information and guarantees from Terraform Labs. As a former Goldman Sachs executive, Scaramucci characterized the NYAG’s actions as “lawfare,” implying the misuse of legal measures to harass a company. He stated: “This is senseless and completely misaligned with the SEC and DOJ, which are pursuing actions against Do Kwon and Terraform. It’s pure LAWFARE due to a little-known but highly potent New York law, the Martin Act. This law doesn’t require proving intent, resulting in a low proof standard that can lead to misuse like this. It should not exist.”
Conversely, Mike Belshe, CEO of BitGo, a cryptocurrency exchange, disagreed with Scaramucci. He argued that the NYAG presented a substantial case based on a pump-and-dump scheme evident in Galaxy Digital’s conduct. Although Belshe is against excessive regulation, as reflected in the substantial penalty imposed, he stresses the importance of ethical conduct among crypto industry leaders, guided by principles-based regulation.
Current State of the Cryptocurrency Market
In other developments, the cryptocurrency market currently stands at a valuation of $2.65 trillion, following a 2.17% decrease over the last week. Bitcoin continues to dominate the market with a 61.2% share, trailed by Ethereum at 8.2%, and various altcoins comprising 30.5% of the market.
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