The New York Attorney General (NAYG) has said recent legal action against Galaxy Digital regarding its publicity relationship with the now-collecting cryptocurrency Terra (LUNA) has been unfair and abuse of the legal system, says Skybridge Capital and founder Anthony Scaramucci.
“It’s a law that’s pure and simple because of the obscure but dangerous New York law known as the Martin Act,” Scaramucci said on March 28th in the X-Post.
Martin Law can “open the door for abuse”
“The law doesn’t have to prove intent, it creates evidence of a low standard that can open the door for such abuse. It should not exist,” he said.
New York’s Martin Act is one of the strictest anti-flood and securities laws in the United States, allowing prosecutors the authority to pursue financial fraud cases without the need to prove their intentions. Nayg argued that Galaxy Digital violated the Martin Act on Terra’s alleged promotion, and that Galaxy Digital agreed to a $200 million settlement.
According to Nayg’s documents filed on March 24th, Galaxy Digital acquired 18.5 million Luna Tokens in October 2020 with a 30% discount, promoting them before selling them without following disclosure rules.
Scaramucci repeatedly stated that Galaxy CEO Michael Novogratz is under the impression that everything he was saying about Luna is true.
Source: Amanda Fisher
Meanwhile, Keith Grossman, president of Enterprise’s MoonPay, said he had never heard of the Martin Act and had to use AI Chatbot ChatGpt to find out.
“It’s very broad and in essence the essence of law,” Grossman said. “Sorry, you got caught up in the crosshairs of that, Mike,” he added.
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The submission allegedly helped Galaxy raise the market price from $0.31 in April 2022 to $119.18 in April 2022.
Asset manager and investor Anthony Pipriano, who is not familiar with the details of the lawsuit, said he calls Novograts a “good man” who has given much time and money to assure him and help others.
The Terra collapse is one of the most infamous failures in the crypto industry. In March 2024, Sec attorney Devon Stern told the US District Court for the Southern District of New York that Terra was a “card house” that fell apart for investors in 2022.
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