Mike Novogratz: Galaxy Digital, the LUNA Tattoo and the Gap Between Promotion and Exposure

1. Wall Street experience becomes a digital-asset business

Novogratz came to crypto with experience at Goldman Sachs and Fortress. The January 2018 corporate announcement records his 1998 partnership at Goldman and his move to Fortress in 2002, where he served as chief investment officer of the macro fund. His official biography also records a Princeton economics degree and service as a US Army helicopter pilot.^[5][6]

On January 9, 2018, Galaxy Digital, First Coin and Bradmer announced a proposed business combination. Its four stated business lines were trading, principal investing, asset management and advisory. This was a plan to build institutional financial services around digital assets; the announcement was conditional on completing the transaction.^[5]

That business model matters to the LUNA story. Galaxy could invest its own capital while its founder publicly discussed the same assets. An audience seeing a prominent investor’s enthusiasm did not necessarily see the firm’s trading decisions.^[5][4]

2. The investment and the tattoo

In his May 2022 letter, Novogratz dated Galaxy’s LUNA investment to the fourth quarter of 2020 and identified balance-sheet capital as the funding source. He described the initial thesis as blockchain payments. The asset in that account was LUNA: an investment in the token should not be confused with equity ownership of its developer.^[1]

UST sought a one-dollar price through its relationship with LUNA. A user could exchange the tokens under the protocol’s mint-and-burn mechanism, linking demand for the stablecoin to demand for a volatile asset. Anchor later concentrated UST demand through high deposit returns; the CEO letter referred to an 18% yield, not a permanently fixed 20% promise.^[1][4]

In early January 2022, Novogratz showed a wolf-and-LUNA tattoo and described himself as a Lunatic. The tweet reproduced in New York’s later settlement displays January 4. The post is evidence of public enthusiasm, not a statement of how much LUNA Galaxy still owned.^[4]

The settlement’s account places that publicity alongside Galaxy’s token sales. Those are the Attorney General’s findings, not admissions by the respondents: the agreement expressly says they neither admit nor deny its factual findings in paragraphs 1–112.^[4]

3. The collapse and what the numbers mean

In May 2022, UST lost its dollar peg and LUNA’s price collapsed. Falling confidence and redemptions could reinforce each other: more LUNA was needed to absorb a given dollar value as its price fell. This was the old Terra/LUNA ecosystem, before the replacement chain. Market incentives had failed to keep the stablecoin stable.^[4][1]

Novogratz’s May 18 letter estimated that LUNA and UST had lost $40 billion in market value. Market value is a price-based estimate, not $40 billion of cash removed from a bank account. The destruction of that valuation affected investors with very different entry prices and exposures.^[1]

UST was an attempt at creating an algorithmic stable coin that would live in a digital world. It was a big idea that failed.^[1]

— Mike Novogratz (2022)

The letter says Galaxy had taken profits; the later New York account says it had sold nearly all its LUNA before the crash. The distinction changes the story: public support for a token did not mean that the firm retained the same exposure as investors who continued holding it.^[1][4]

4. A letter about humility, followed by a disclosure settlement

The open letter was published on May 18, after the collapse. It presented the CEO’s explanation of Galaxy’s investment and risk management. Its account should be read as the company’s perspective, not independent proof that every risk was disclosed to the public.^[1]

My tattoo will be a constant reminder that venture investing requires humility.^[1]

— Mike Novogratz (2022)

The later record adds a different question. On March 27, 2025, the New York agreement took effect. It required Galaxy entities to pay $200 million in disgorgement and accept conduct requirements after the Attorney General’s findings concerning LUNA promotion and sales. The respondents neither admitted nor denied the factual findings specified in paragraph 118. This was a civil settlement, not a criminal conviction.^[4]

The tattoo remained visible, but the investment position changed. The useful lesson is to distinguish an investor’s public narrative from actual exposure and disclosure. Humility in a retrospective letter does not by itself resolve that distinction.^[1][4]