On March 28, 2025, Galaxy Digital, a leading cryptocurrency investment firm headed by billionaire Mike Novogratz, agreed to pay a $200 million fine to settle allegations of market manipulation tied to the LUNA token. Announced by the New York Attorney General’s (NY AG) office, this settlement addresses claims of deceptive practices. Specifically, Galaxy Digital secretly sold LUNA tokens while publicly promoting them, profiting massively before the Terra ecosystem’s collapse in May 2022. Consequently, the Galaxy Digital LUNA fine marks a pivotal moment in the ongoing crackdown on crypto fraud in 2025. Moreover, it highlights the urgent need for accountability in the digital asset industry.
Allegations and Settlement Breakdown
The New York Attorney General (NY AG) investigation revealed a 2020 agreement between Galaxy Digital and Terraform Labs, the company behind the Terra blockchain, led by CEO Do Kwon. Terraform Labs allegedly sold Galaxy Digital 18.5 million LUNA tokens at a 30% discount in exchange for public endorsements. While Galaxy Digital vocally promoted LUNA—enhancing its credibility and driving up its price—it secretly sold off its holdings, pocketing hundreds of millions in profits. This LUNA price manipulation scheme continued until the Terra ecosystem’s devastating collapse in May 2022, wiping out $60 billion in market value and leaving investors devastated.
The $200 Million Settlement: Accountability in Action
The $200 million settlement, finalized on March 28, 2025, includes disgorgement of profits, penalties, and restitution for affected investors. The NY AG stressed that such deceptive practices undermine market integrity and disproportionately harm retail investors, many of whom lost their life savings in the Terra crash. Reactions on X show a split: some praise the fine as a win for LUNA victims, with one user stating, “Finally, some accountability,” while others call it inadequate, pointing to Galaxy Digital’s $355 million profit from LUNA sales in Q1 2022, as reported by CoinDesk.
The Terra Collapse: A $60 Billion Disaster
Once a DeFi powerhouse, the Terra ecosystem featuring LUNA and the UST stablecoin boasted a total value locked (TVL) exceeding $20 billion, according to DeFiLlama. Its algorithmic model, where LUNA was burned to maintain UST’s $1 peg, unraveled in May 2022 when UST lost its peg. This triggered a death spiral, inflating LUNA’s supply from 400 million to 6.9 trillion tokens in days and crashing its price by 99%. The $60 billion wipeout, as reported by Coin68, rippled through the market, toppling firms like Three Arrows Capital and deepening the 2022 crypto winter.
Galaxy Digital’s ties to Terra began with a $25 million investment in January 2021, alongside Coinbase Ventures and Pantera Capital. Mike Novogratz, a self-proclaimed “Lunatic” with a LUNA-themed tattoo, championed the token publicly. Yet, the NY AG alleges that behind the hype, Galaxy Digital engaged in “shilling,” dumping LUNA tokens and misleading investors as prices soared artificially.
Crypto Fraud 2025: A Regulatory Reckoning
The Galaxy Digital LUNA fine aligns with a broader 2025 crackdown on crypto misconduct. The SEC recently fined Digital Currency Group $38 million for investor deception, while Jump Trading’s Tai Mo Shan paid $123 million in December 2024 for LUNA-related fraud. With Bitcoin hitting $83,134 on March 30, 2025 after peaking at $100,000 in December 2024 these cases reflect heightened regulatory scrutiny as the market rebounds. The New York AG settlement underscores a push for transparency, though some X users fear excessive regulation could hinder innovation.
Implications for the Crypto Industry
The $200 million penalty raises critical questions about institutional ethics in crypto. While fines may deter fraud, rebuilding trust post-Terra requires more than punishment it demands systemic reform. The Galaxy Digital case highlights the lasting fallout of the Terra collapse, shaping investor caution and regulatory frameworks in 2025 and beyond.
LUNC Token Price History
Screenshot from CoinGecko, captured at 10 AM on March 31, 2025, showing LUNC token price fluctuations.
Conclusion: A Step Toward a Trustworthy Crypto Future
The $200 million Galaxy Digital LUNA fine for price manipulation serves as a stark warning of crypto market risks and the cost of deceit. As crypto fraud 2025 cases escalate, this New York AG settlement marks a stride toward accountability, potentially fostering a more transparent digital asset landscape. Yet, with Terra’s scars still fresh, restoring investor faith will take more than fines it requires lasting change.
Disclaimer: This is for informational purposes only, not financial advice. Always research and consult a professional before investing.
