Anthony Scaramucci has condemned the New York Attorney General’s lawsuit against Galaxy Digital as a misuse of legal power, calling it “lawfare” driven by the state’s controversial Martin Act. The SkyBridge Capital founder made the remarks in a March 28 post on X, responding to the $200 million settlement reached between Galaxy Digital and the New York AG over the firm’s promotion of the now-defunct cryptocurrency Terra (LUNA).
“This makes no sense and is completely at odds with the SEC and DOJ which have been pursuing actions against Do Kwon and Terraform,” Scaramucci said. He defended Galaxy CEO Michael Novogratz, stating that “everything he ever said about Luna was because he thought it was true based on the deception perpetrated by the real bad actors here—Do Kwon and Terraform Labs.”
Filed on March 24, the New York AG’s complaint alleged that Galaxy Digital purchased 18.5 million LUNA tokens at a 30% discount in October 2020. The firm then promoted LUNA and sold it without disclosing its holdings, according to the filing. The Martin Act, one of the strictest securities laws in the U.S., allowed the AG to pursue the case without proving fraudulent intent.
“The law has no need to prove intent, creating a low standard of proof that can open the door for abuse like this. It shouldn’t exist,” Scaramucci wrote.
$200 Million Settlement Over Promotion and Disclosure
As part of the agreement, Galaxy Digital will pay $200 million in four installments over three years. The first $40 million is due within 15 days of the settlement, with another $40 million within one year. Two additional payments of $60 million are scheduled in the second and third years.
The AG’s office said Galaxy helped inflate LUNA’s price from $0.31 in October 2020 to $119.18 by April 2022, resulting in profits estimated in the hundreds of millions of dollars. The filing also accused Galaxy and Novogratz of falsely stating that Terra’s blockchain supported the South Korean payments app Chai. These claims were reportedly repeated in a press release shared with Bloomberg, which included unsupported user and transaction volume figures.
Crypto Industry Pushback
MoonPay president Keith Grossman also questioned the use of the Martin Act, calling it “so broad” that he had to look it up using ChatGPT. “It is essentially the essence of lawfare,” Grossman said, addressing Novogratz directly: “Sorry you got caught in the crosshairs of it, Mike.”
Anthony Pompliano, an asset manager and investor, said he was unfamiliar with the lawsuit’s details but described Novogratz as a “good man” who has contributed significant resources to helping others.
The collapse of Terra in May 2022 triggered a market-wide downturn. The incident, described by SEC attorney Devon Staren as a “house of cards,” wiped out billions in value.
