Quick Takeaways
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Scaramucci Criticizes NYAG: Anthony Scaramucci denounces the New York State Attorney General’s lawsuit against Galaxy Digital, claiming it misuses the Martin Act, which allows legal action against financial fraud without proving intent.
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Allegations Against Galaxy: The NYAG accused Galaxy Digital of promoting Luna cryptocurrency linked to Terraform Labs, alleging misrepresentation and failure to disclose key information, resulting in a $200 million settlement.
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Defense of Galaxy: Scaramucci defends Galaxy Digital and its founder Mike Novogratz, attributing Luna’s issues to the deception by Terraform Labs and its founder, Do Kwon, rather than any wrongdoing by Galaxy.
- Concerns Over the Martin Act: Scaramucci warns that the Martin Act’s low proof standard could lead to legal abuse, arguing that it undermines fair prosecution and contradicts federal efforts against Kwon and Terraform.
Anthony Scaramucci Criticizes NYAG Lawsuit Against Galaxy Digital
Anthony Scaramucci, a prominent financier, has voiced strong criticism of the New York State Attorney General’s (NYAG) lawsuit against Galaxy Digital. Scaramucci, who founded the investment firm SkyBridge Capital, claims the case is unfair and misuses New York law. Specifically, he points to the Martin Act, which allows the Attorney General to pursue financial fraud without proving intent.
On March 28, the NYAG filed documents accusing Galaxy Digital of promoting the cryptocurrency Luna (LUNA), linked to the now-failed Terraform Labs. According to the suit, Galaxy bought 18.5 million LUNA at a steep discount and sold them without adequate disclosures. Notably, Galaxy co-founder Mike Novogratz even tattooed Luna’s logo when the cryptocurrency soared to $100 in December 2021. Despite purchasing LUNA for $0.31 each, Galaxy made significant profits before the asset’s collapse in May 2022.
The NYAG described Galaxy’s actions as violations of the Martin Act, stating that they misrepresented information about LUNA while selling it to investors.
In response, Galaxy Digital has agreed to a $200 million settlement with New York, structured over three years. Payments will include an initial $40 million within 15 days, followed by $40 million in one year, and $60 million in the subsequent two years.
Scaramucci argues that the lawsuit opens the door for potential abuse of the Martin Act. He believes the actions against Galaxy contradict the ongoing legal issues faced by Terraform Labs and its founder, Do Kwon, who he labels as the “real bad actors.” Furthermore, Scaramucci emphasizes that the low standard of proof under the Martin Act could set a concerning precedent for future cases.
Innovations in the blockchain space hinge on stable regulatory environments. As litigation unfolds, it could impact how companies operate within this rapidly evolving sector.
Scaramucci’s passionate defense of Galaxy Digital highlights the pressing debate on regulatory approaches to cryptocurrency and technological advancements.
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