The collapse of the Terra ecosystem (LUNA-UST) in 2022 shook the entire crypto industry, wiping out more than 60 billion USD from the market. Now, nearly three years later, one of the biggest beneficiaries of the LUNA craze – Galaxy Digital – has had to pay the price. The crypto investment firm founded by billionaire Michael Novogratz has just reached an agreement with the New York Attorney General's Office (NYAG), agreeing to pay a fine of 200 million USD for price manipulation of LUNA.
Galaxy Digital "shilled" LUNA but quietly sold off its holdings
According to records from NYAG, #GalaxyDigital has taken serious contradictory actions related to LUNA:
Buying at a low price: In 2020, Galaxy Digital purchased 18.5 million LUNA tokens at a 30% discount to the market price.
Public promotion: This company continuously praised the potential of Terra, making LUNA one of the hottest assets in the crypto market.
Quietly selling off: While still "shilling" LUNA, Galaxy secretly sold off most of its token holdings, earning over 100 million USD before the project's collapse in May 2022.
Selling at the peak: When $LUNA peaked at 119.18 USD in April 2022, Galaxy Digital had almost withdrawn all capital, leaving most retail investors "stuck."
Just one month later, LUNA plummeted to nearly 0, causing one of the most severe collapses in crypto history.
Heavy penalties from the New York authorities
Under the agreement with NYAG, Galaxy Digital will have to pay 200 million USD within three years, with the first payment of 40 million USD due in the next two weeks. Additionally, the company must implement new policies to prevent future conflicts of interest, including:
Stricter legal analysis regarding investments in tokens.
Stricter regulations on promotional statements to avoid the situation of both PR and selling off as was done with LUNA.
This incident marks one of the largest penalties related to the collapse of LUNA, showing that the US government is tightening control over the crypto market.
Not only Galaxy Digital, but many other names are also being "scrutinized"
Galaxy Digital is not the only organization held accountable for the LUNA-UST collapse. Previously, Jump Crypto was also fined 123 million USD, while Terraform Labs, the company that founded LUNA, was fined up to 4.7 billion USD by the SEC.
As for Do Kwon, the founder of Terraform Labs, he is currently facing a series of legal accusations. After being arrested in Montenegro, Do Kwon is awaiting trial and could be extradited to the US or South Korea.
What future awaits Terra?
After the collapse, Terraform Labs announced a "resurrection" plan with Terra 2.0. However, as of now, the project still shows no signs of recovery.
The Terra Classic Token (LUNC) currently has a market capitalization of about 339 million USD, down more than 100 times from its peak of 40.9 billion USD in 2022.
Trust in the Terra ecosystem has almost vanished, as there are not many major projects building on this platform anymore.
Nevertheless, the story of LUNA remains an important lesson for the crypto market: Do not easily trust promotional claims, especially from organizations with financial interests tied to the token they are "shilling."
