The Office of the New York Attorney General (OAG) has cracked down on the financial investment firm Galaxy Digital Holdings.
The OAG has recently fined the firm a whopping $200 million for manipulating the price of Luna, a cryptocurrency that crashed in 2022.
This came after an investigation found that Galaxy Digital secretly sold its Luna holdings while publicly promoting the token.
Galaxy Digital CEO Michael Novogratz misled investors to boost Luna’s price while earning profits. This case highlights the urgent need for transparency and accountability in the crypto industry.
In 2020, Galaxy Digital bought 18.5 million Luna tokens for $0.22 each, about 30% below market price, through a deal with Terraform Labs, Luna’s creator. In exchange, Galaxy Digital agreed to promote the token.
Novogratz and other executives hyped Luna as a game-changing asset, claiming it was widely used for payments, and even compared it to Bitcoin (BTC) and Ethereum (ETH). This helped push Luna’s price to $119.18 in April 2022.
As Luna’s value soared, retail investors bought in. Novogratz even got a Luna tattoo in December 2021 to show his support. However, Galaxy Digital was selling off its Luna holdings behind the scenes.
By April 2022, the company had offloaded most of its tokens. A month later, Luna crashed, wiping out over $40 billion from the market and leaving many investors with huge losses.
Galaxy Digital’s actions follow a growing trend of how big businesses and investors create fake hype around tokens to drive up their market values.
After a thorough investigation, the OAG concluded that Galaxy Digital engaged in fraud, deception, and market manipulation. The company was fined $200 million, the biggest penalty ever given to a crypto firm for misconduct.
In addition to the fine, Galaxy Digital must now follow strict compliance rules to prevent future violations. The case has also increased pressure on regulators to tighten oversight on crypto companies, especially how they promote digital assets.
The scandal has also reignited debates about whether cryptocurrencies should be classified as securities. However, the current administration is working to prevent this from happening.
Galaxy Digital’s reputation has taken a major hit, and investors are questioning the company’s ethics. Once a strong supporter of Luna, Novogratz is now facing backlash for misleading the public while profiting from the scheme.
Although Novogratz has yet to be charged personally, legal experts believe further investigations could result in more penalties or restrictions on his financial activities.
Market manipulation is a big issue in the crypto industry, and authorities are cracking down on bad actors who are involved in such schemes.
The post Galaxy Digital Fined $200M for Market Manipulation in LUNA Scandal appeared first on TheCoinrise.com.
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