Anthony Scaramucci has criticized the New York Attorney General’s (NAYG) lawsuit against Galaxy Digital, calling it an example of “lawfare,” while another crypto executive noted that the law in question was so obscure he had to look it up on ChatGPT.
The lawsuit, which targets Galaxy Digital over its promotional ties to the now-defunct Terra (LUNA) cryptocurrency, is an abuse of legal power, according to SkyBridge Capital founder Scaramucci.
“It’s LAWFARE, pure and simple, due to an obscure but dangerously powerful New York law known as the Martin Act,” Scaramucci stated in a March 28 post on X.
Martin Act: A Tool for Legal Overreach?
Scaramucci argued that the Martin Act enables prosecutorial overreach. “The law requires no proof of intent, creating a low standard of proof that can be easily abused. It shouldn’t exist,” he said.
The Martin Act is one of the most stringent financial fraud statutes in the U.S., granting prosecutors the authority to pursue cases without needing to establish intent. The NAYG accused Galaxy Digital of violating this law in its dealings with Terra, leading to a $200 million settlement.
Legal filings from March 24 reveal that Galaxy Digital purchased 18.5 million LUNA tokens at a 30% discount in October 2020, subsequently promoting and selling them without adhering to disclosure requirements.
Scaramucci defended Galaxy CEO Michael Novogratz, insisting that he had genuinely believed in Terra’s potential and was misled by Terraform Labs and its former CEO, Do Kwon.
Crypto Executives Weigh In
Keith Grossman, MoonPay’s president of enterprise, admitted he was unfamiliar with the Martin Act and had to research it using ChatGPT. “It’s so broad that it embodies the essence of lawfare,” he commented. “Sorry you got caught in the crosshairs of it, Mike.”
The lawsuit claims that Galaxy’s involvement helped elevate LUNA’s market price from $0.31 in October 2020 to $119.18 in April 2022, generating profits in the hundreds of millions.
Investor and asset manager Anthony Pompliano, though not well-versed in the case’s details, vouched for Novogratz’s character. “Mike is a good man who has invested significant time and money into helping others,” he said.
The Legacy of Terra’s Collapse
Terra’s collapse remains one of the most infamous failures in crypto history. In March 2024, SEC attorney Devon Staren described Terra in a New York court as a “house of cards” that ultimately crumbled, devastating investors in 2022.
