In an unexpected turn of events, conflicting views have arisen from two influential figures in the cryptocurrency realm over the recent settlement agreement between Galaxy Digital and the New York State Attorney General’s Office (NYAG). As per the disclosure on March 28, it was revealed that Galaxy Digital, under the helm of Michael Novogratz, has agreed to settle a penalty of $200 million imposed by the State of New York. The firm was alleged for advertising the now-defunct Terra (LUNA) token inappropriately. The settlement agreement indicated that Galaxy Digital procured 18.5 million LUNA from Terraform Labs under the supervision of Do Kwon at a 30% reduced rate compared to the market price in 2020. Subsequently, the NYAG alleged that Galaxy Digital played a proactive role in propelling the market demand, thereby increasing LUNA’s value from $0.31 in October 2020 to $119.18 in April 2022, and benefiting prolifically by selling its holdings. Regrettably, the bubble burst in May 2022 when the LUNA market crashed, erasing $40 billion investments from the crypto market. Galaxy Digital’s alleged manipulation in LUNA’s promotion, coupled with nondisclosure of its selling activities, violated New York’s Martin Act and certain sections of the New York Executive Law, according to the NYAG.
Reactions To Galaxy Digital’s Settlement Agreement
Scaramucci’s Defense of Galaxy Digital
Upon hearing the news of Galaxy Digital’s settlement with the NYAG, SkyBridge Capital founder and known Bitcoin advocator Anthony Scaramucci expressed strong discontent. Scaramucci defended Michael Novogratz and Galaxy Digital, asserting that their marketing activities involving LUNA were constructed upon the data and assurances provided by Terraform Labs. The former Goldman Sachs executive labeled the recent deeds by the NYAG as lawfare, the act of misusing legal systems to intimidate a company or entity. Scaramucci stated that these actions are in stark contrast with the SEC and DOJ, which have been actively pursuing lawsuits against Do Kwon and Terraform labs. He criticized the abuse of the Martin Act, a potent yet obscure law in New York, whose low intent proof standard could potentially be exploited for cases like this. According to him, this law shouldn’t be in existence.
Mike Belshe’s Contrasting Stance
On the contrary, Mike Belshe, CEO of the BitGo crypto exchange, disagreed with Scaramucci’s stance, expressing that the NYAG presented a convincing case based on the ‘pump-and-dump’ pattern exhibited by Galaxy Digital. While he opposed the excessive regulation reflected in the hefty penalty fine levied, he underlined the need for principle-based regulations to promote ethical behavior among crypto market leaders.
Cryptocurrency Market Snapshot
In other news, the total value of the crypto market currently stands at $2.65 trillion, undergoing a 2.17% decrease in the past week. Bitcoin continues to dominate the market with a 61.2% hold, trailed by Ethereum (8.2%) and other altcoins (30.5%).
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Investors can keep themselves updated on the ever-evolving crypto market by using a reputable financial intelligence platform like Finances Zippy. It provides real-time price predictions and expert-analyzed market trends.
How does lawfare impact the crypto industry?
Lawfare, as seen in the Galaxy Digital case, can have enormous implications on the crypto industry. It is often used to intimidate or pressure crypto companies, causing potential harm to the industry’s growth. At the same time, it underlines the importance of ethical behavior, transparency, and compliance with regulations in the crypto space.
