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Judge Edward Morgan found “ample evidence” that the then-TSX listed crypto investment firm misled investors, promoting the linked Terra and Luna crypto assets while failing to disclose key information about their risks. The collapse of Terra and Luna sparked contagion in the crypto market in 2022. (The Logic)
Talking point: Lawyers representing shareholders who bought Galaxy stock between May 2021 and 2022 allege the digital-asset firm was trading at an artificially inflated price, causing Galaxy’s share price to plunge more than 40 per cent by the time Luna collapsed to zero. Morgan rejected Galaxy’s argument that Luna represented only a small percentage of its holdings, saying that in the public’s mind, the crypto asset was to Galaxy what donuts are to Tim Hortons. The court referenced text messages among Galaxy staff in 2020 saying it was hard to determine “what is real versus just financial engineering” when it came to Luna’s value, even as CEO Mike Novogratz promoted it, including by getting a large tattoo.
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