Galaxy Digital Faces $200M Settlement Over Terra Promotion

Galaxy Digital Faces $200M Settlement Over Terra Promotion

Galaxy Digital will pay $200 million in a multiyear settlement with the New York Attorney General over its promotion of Terra without proper disclosures. The Mike Novogratz firm acquired 18.5 million LUNA at a discount, promoted it with inflated claims, and sold before the collapse, pocketing hundreds of millions in profit.

Regulators accused Galaxy of falsely stating that South Korea’s Chai app ran on the Terra blockchain, echoing now-debunked claims from Terraform Labs. “These statements were false… Galaxy failed to independently verify them,” the filing said.

The fallout follows Terra’s historic collapse in May 2022, when its stablecoin UST lost its peg and triggered hyperinflation in LUNA, destroying over $40 billion in market value. Terraform Labs will open a claims portal on March 31 for impacted investors, with a strict deadline of April 30.

Claimants must submit evidence of ownership, with read-only API keys preferred for faster review, and only select assets are eligible. Approved claims will be paid out pro rata, with initial decisions expected within 90 days of the deadline.

‍

FDIC Drops Approval Requirement for Crypto Activities at Banks

The FDIC announced Friday that financial institutions under its supervision no longer need prior approval to engage in crypto-related activities. The agency rescinded earlier guidance that required banks to notify regulators before entering the digital asset space. Acting Chair Travis Hill said the decision signals a shift toward a more supportive stance under the Trump administration.

The decision follows years of tension between banks and federal agencies over access to crypto services. It also comes after criticism of “reputational risk” policies that allegedly allowed the FDIC to pressure banks into cutting ties with crypto firms. According to Bo Hines, executive director of the President’s Council of Advisers for Digital Assets, the change is "another big win" for the industry.

‍

Trump Pardons BitMEX Founders and Employees

U.S. President Donald Trump issued full pardons to former BitMEX CEO Arthur Hayes, co-founders Benjamin Delo and Samuel Reed, employee Greg Dwyer, and the exchange's operating entity HDR Global Trading. The group had pleaded guilty to violating the Bank Secrecy Act (BSA) following DOJ charges in 2020 related to the lack of customer identity checks on the platform.

Hayes received two years probation, while his colleagues were given similar sentences and fined. In a statement, Delo said the charges were politically motivated and that the pardon is a "vindication" of their stance. This adds to a growing list of controversial crypto figures being pardoned, including Silk Road creator Ross Ulbricht earlier this year.

‍

EU Regulator Proposes 100% Capital Backing for Crypto Assets

The European Insurance and Occupational Pensions Authority (EIOPA) proposed that insurance firms must fully back crypto holdings with equal capital due to the assets' volatility. The proposal, made in a technical report to the European Commission, is a stricter approach than existing rules for stocks or real estate. EIOPA argued that crypto assets have experienced price crashes of up to 91%, justifying a 100% “stress level.”

If adopted, the rule would require firms to assume crypto assets could lose all value without any protection from diversification. Luxembourg and Sweden, which hold 69% and 21% of EU insurance crypto exposure respectively, would be most affected. Despite the relatively small market size (just 0.0068% of total holdings) EIOPA said the policy would bolster consumer protection without significant cost.

‍

Data of the Day

PumpSwap, the decentralized exchange spun out of meme coin platform PumpFun, has crossed $10 billion in cumulative volume just 10 days after launching on March 20. The Solana DEX now processes the majority of decentralized trading on the network, reaching a 67.4% market share over the weekend. PumpFun created the exchange to allow easy migration for popular tokens previously relying on Raydium.

The protocol has already attracted nearly 700,000 wallets and generated over $20 million in platform fees. Liquidity providers have earned over $5 million. As PumpSwap surges, competitor Raydium is developing its own meme coin launchpad, LaunchLab, in a bid to reclaim dominance in the Solana DeFi ecosystem.

‍

More Breaking News

• FTX will begin repaying major creditor claims over $50,000 on May 30, though crypto valuations are based on 2022 prices, now far below current market value.
• Haliey Welch, known as the “Hawk Tuah” girl, won’t face charges after the SEC closed its investigation into the HAWK meme coin.
• The US SEC has officially dropped its cases against Kraken, ConsenSys, and Cumberland DRW, marking a regulatory shift and ending what Kraken called a “wasteful” campaign.
• South Carolina has dismissed its staking lawsuit against Coinbase, joining Vermont in a move Coinbase says protects consumer access to decentralized finance.
• Bitcoin miner Marathon Digital plans to raise $2 billion through a stock sale to fund further BTC acquisitions, continuing its aggressive buy-and-hold strategy.
• Sonic has abandoned its USD algorithmic stablecoin plans in favor of a dirham-based token, aligning with the UAE’s upcoming central bank digital currency.
• Darkweb actors are claiming to sell over 100,000 user records from Gemini and Binance, including emails, phone numbers, and location data, according to cyber monitors.

For the latest updates on digital asset markets, follow us on X @Datawalletcom.