Galaxy Digital has reached a $200 million settlement with the New York Attorney General (NYAG), following allegations the firm failed to disclose its financial interests while promoting the now-collapsed LUNA cryptocurrency.

What Happened: The agreement, revealed through a state filing, resolves a case brought under the Martin Act and Executive Law, Axios reported.

Galaxy Digital CEO Mike Novogratz told Benzinga that after careful consideration, “settling this matter will help Galaxy move forward and minimize distractions” to focus on its mission of “driving innovation and growth in digital assets and artificial intelligence infrastructure.”

The case accuses Galaxy of misleading investors by not disclosing that it was actively selling LUNA (CRYPTO LUNA) tokens even as its executives publicly endorsed the project.

Galaxy Digital was among the high-profile backers of Terraform Labs' algorithmic stablecoin TerraUSD UST/USD and its sister token LUNA.

These assets infamously collapsed in 2022, wiping out over $40 billion in market value and shaking investor confidence in the crypto sector.

According to the NYAG's filing, Galaxy secured a deal to buy 18.5 million LUNA tokens at a significant discount. The tokens were to be released monthly over a year.

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Why It Matters: Despite publicly expressing support for LUNA—including Novogratz's now-famous tattoo commemorating the token's price rise—Galaxy quietly sold the majority of its holdings, realizing over $100 million in profits by early 2022.

The settlement further claims Galaxy played a key role in amplifying LUNA's value, helping it climb from $0.31 in late 2020 to a peak of $119.18 in April 2022.

By March of that year, the firm had divested most of its position while continuing to promote the asset.

The agreement includes a series of compliance measures designed to prevent future conflicts of interest.

These include mandates for legal reviews of token investments and greater transparency around any promotional activities or staff-related holdings.

Galaxy has neither admitted nor denied the allegations, and neither the firm nor the NYAG have publicly commented since the settlement's publication.

The company is expected to release its annual earnings later this week.

This is the latest in a series of enforcement actions stemming from the LUNA crash. Terraform Labs and its founder Do Kwon, currently detained in Montenegro, previously settled with U.S. authorities for $4.7 billion.

A market-making firm tied to the case, Jump Crypto, paid $123 million in a separate settlement.

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