{"id":125999,"date":"2025-03-28T12:15:48","date_gmt":"2025-03-28T12:15:48","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=125999"},"modified":"2025-03-28T12:15:48","modified_gmt":"2025-03-28T12:15:48","slug":"galaxy-digital-to-pay-200m-over-terra-promotion-fallout","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=125999","title":{"rendered":"Galaxy Digital to pay $200M over Terra promotion fallout"},"content":{"rendered":"<p>Source: Cointelegraph.com NewsMichael Novogratz\u2019s crypto investment firm Galaxy Digital has agreed to pay $200 million in a settlement related to its alleged promotion of the now-collapsed cryptocurrency Terra (LUNA)<br \/>\nAccording to New York Attorney General\u2019s office documents filed on March 24, Galaxy Digital acquired 18.5 million LUNA tokens at a 30% discount while promoting them before selling them without abiding by disclosure rules. The filing states:<br \/>\n\u201cUltimately, 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.\u201c<br \/>\nAs part of the settlement agreement, Galaxy will pay $200 million in monetary relief over a three-year period: $40 million within 15 days, another $40 million within one year, followed by two additional payments of $60 million due within the second and third years, respectively.<br \/>\nRelated: A beginner\u2019s guide on algorithmic stablecoins<br \/>\nGalaxy Digital reportedly spread fake news<br \/>\nThe Attorney General\u2019s filing also accused Galaxy Digital and Novogratz of spreading false claims about Terra\u2019s usage. In particular, the firm allegedly stated that the South Korean payments app Chai was built on the Terra blockchain, which was not accurate.<br \/>\nThis claim was also included in a press release sent to Bloomberg highlighting that the app \u201chosts over 2 million users and generates $1.2 billion in annualized transaction volume.\u201d The release reads:<br \/>\n\u201cThese statements were false. They were based on representations by Kwon and Terraform to Galaxy, but Galaxy failed to independently verify them.\u201c<br \/>\nGalaxy Digital\u2019s Novogratz mentions Terra usage in Chai following Terra\u2019s collapse. Source: Galaxy DigitalRelated: Terra\u2019s Do Kwon\u2019s US court hearing delayed as prosecutors review a swath of new evidence<br \/>\nTerra\u2019s collapse and market fallout<br \/>\nTerra and its algorithmic stablecoin, TerraUSD (UST), both experienced a dramatic collapse due to a breakdown in the mechanism designed to maintain UST\u2019s peg to the US dollar back in May 2022. The event occurred when a large holder sold a substantial amount of UST.<br \/>\nThe large sell-off triggered market panic, causing UST to deviate from its expected value. The mechanism intended to stabilize UST involved minting new LUNA tokens to buy back UST, resulting in massive LUNA supply inflation and creating intense downward pressure on LUNA\u2019s price.<br \/>\nAs Cointelegraph reported at the time, if the market cap of LUNA became lower than that of UST, there would not be enough funds to maintain the peg of the stablecoin. With the asset backing the stablecoin losing value as its supply continued to increase, the assets entered a self-reinforcing spiral, which caused both assets to lose nearly all their value within hours.<br \/>\nThis wiped out billions in market capitalization and triggered a broader cryptocurrency market downturn at the time. The memory of the event is still fresh, with the Sonic blockchain\u2019s recent unveiling of a high-yield algorithmic stablecoin being met with fears due to perceived similarities.<br \/>\nMagazine: Bitcoiner sex trap extortion? BTS firm\u2019s blockchain disaster: Asia Express<a href=\"https:\/\/cointelegraph.com\/news\/galaxy-digital-terra-settlement-200m?utm_source=rss_feed&amp;utm_medium=rss&amp;utm_campaign=rss_partner_inbound\" target=\"_blank\" class=\"feedzy-rss-link-icon\" rel=\"noopener\">Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>Source: Cointelegraph.com NewsMichael Novogratz\u2019s crypto investment firm Galaxy Digital has agreed to pay $200 million in a settlement related to its alleged promotion of the now-collapsed cryptocurrency Terra (LUNA) According&hellip; <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125999"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=125999"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125999\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=125999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=125999"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=125999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}