Crypto Hedge Fund Galois shuts down after losing $40M to bankrupt FTX

Key Takeaways:

  • The co-founder of Galois stated that the fund had stopped all trading because it was no longer feasible after FTX.
  • 90% of the available cash will be returned to investors by Galois Capital, with the remaining 10% being held in reserve.

One of the FTX collapse victims, the hedge fund Galois Capital, has given up after having half of its assets stranded in the insolvent exchange. Finally, the fund has decided to close and give investors their money back.

On November 12, 2022, the hedge fund acknowledged that it has significant exposure to the FTX market through a tweet that was sent from its official account.

The fund has reportedly informed investors in a letter that all trading has been suspended and that the firm has rolled back its positions, according to a Financial Times report. Galois Capital’s co-founder Kevin Zhou apologized to their investors and made clear that they are unable to justify continuing their activities in light of the gravity of the FTX crisis. Galois Capital tweeted:

“I appreciate the outpouring of support today when the FT article came out. Thank you all for the kind words. Yes, it is true that our flagship fund is shutting down.”

Furthermore, according to the hedge fund, investors will receive 90% of the available cash that are not locked up in the FTX market. There will be a temporary retention of the remaining 10% by the corporation while the negotiations are underway.

In addition, Zhou indicated a preference for selling the hedge fund’s claims instead of delaying a drawn-out bankruptcy procedure that may take a decade. The co-founder of Galois Capital thinks that buyers of these claims have a better chance of succeeding in filing their lawsuits in bankruptcy courts.

Millions of company funds, including those of New Huo Technology and Nestcoin, were frozen as a result of the FTX bankruptcy. With at least $50 million in cash trapped in the exchange, Galois Capital is one of the many victims of the FTX fiasco.

In contrast, the largest Mt. Gox creditor has also opted for an early payout option rather than waiting for a protracted judicial process that may take years. This decision is similar to Galois Capital’s strategy. On February 17, Mt. Gox Investment Fund announced that it has chosen to receive payment in September rather than delaying the return of its assets.

Deep Dalal
Deep Dalal


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