Michael Novogratz’s crypto investment firm Galaxy Digital agrees to pay $ 200 million in a settlement related to its alleged promotion so far collapsed cryptocurrency terra (Luna)
According to In New York’s lawyer’s office documents filed on March 24, Galaxy Digital obtained 18.5 million Luna Tokens in a 30% discount, then they are advanced before selling them without complying with disclosure policies. The states of filing:
“Eventually, Galaxy helped a little-known token increase in market prices from $ 0.31 in October 2020 to $ 119.18 in April 2022, while profiling for hundreds of millions of dollars.”
As part of the negotiation agreement, Galaxy will pay $ 200 million in financial comfort for three years: $ 40 million in 15 days, another $ 40 million in one year, and two additional payments of $ 60 million due to the second and third years, respectively.
Related: Guide a starting with Algorithmic Stablecoins
Galaxy Digital has been reported spreading fake news
File also accused the Galaxy Digital and Novogratz of spreading false claims about Terra’s use. In particular, the firm said the South Korea payment app Chai was built on the Terra Blockchain, which was inaccurate.
This claim is also included in a press release sent to Bloomberg featuring that the app “has” shaped more than 2 million users and forms $ 1.2 billion in the annual volume of transactions. ” Read the release:
“These statements are not true. They are based on Kwon and Terraform’s representations in Galaxy, but Galaxy has failed to unite to prove them.”
Galaxy Digital’s Novogratz cited the use of Terra in Chai following Terra’s collapse. Source: Galaxy Digital
Related: The Terra Court hearing was delayed as prosecutors review a swath of new evidence
Terra’s collapse and market collapse
Terra and its algorithmic stablecoin, terrausd (UST), Both experienced a dramatic collapse Due to a deterioration in the mechanism designed to maintain UST’s peg in the US dollar in May 2022. The event occurred when a large owner sold a large amount of UST.
The huge sale-off that triggers the panic in the market, causing UST to deviate from its expected value. The mechanism intended to stabilize UST involved in the Minting of New Luna tokens to buy Back UST, resulting in massive inflation of Luna’s supply and creation of Luna’s high pressure.
Number Cointelegraph reported at that timeIf Luna’s market cap has become less than UST, there is not enough funding to maintain the stablecoin peg. With backing the Stablecoin asset losing its value as its supply continued to rise, the properties entered a self-reinforcing spiral, causing both properties to lose almost all of their value within a few hours.
It wiped the billion -billion in the market capitalization of the market and has triggered a broader cryptocurrency market collapse. Event memory is still fresh, along with the recent Sonic Blockchain unvensation of a high yield algorithmic stablecoin that identified with fears because of the noted uniformity.
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