After Losing US $40M, Crypto Hedge Fund Galois Capital is Closing

The Financial Times reported on Monday that crypto hedge fund Galois Capital is closing, and the remaining funds will be returned to investors after losing US$40 million in assets as a result of the collapse of cryptocurrency exchange FTX.com.

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Quick Facts

• It had been announced that Galois had halted all trading and closed out all of his positions. Those clients of the hedge fund will receive 90% of the funds that are not trapped in FTX through the hedge fund, while the remaining 10% will be withheld until discussions with the administrators are finalized.

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• Apparently, Galois was able to sell its claim for 16 cents on the dollar, since the legal process to recoup the funds would likely take more than a decade, and buyers of distressed claims are more knowledgeable about the process of trying to recover the funds.

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•  According to a letter sent by Galois co-founder Kevin Zhou to investors seen by the Financial Times, the saga which started with Luna's collapse, followed by the [Three Arrows Capital] credit crisis, and finally, with FTX/Alameda's bankruptcy has set back the crypto space significantly. "However, even now I am still hopeful about the long-term prospects of cryptocurrencies," he said.

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• At one point during the past year, Galois was managing roughly 200 million dollars in assets. Around half of the firm's assets were reportedly trapped at FTX when the firm collapsed, according to reports.

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• Its founder and former chief executive Sam Bankman-Fried filed for Chapter 11 bankruptcy on Nov. 11, and he is currently under house arrest at his parent's house in California after being charged with securities fraud, wire fraud, conspiracy, money laundering, and campaign finance violations.

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• The first trial for Bankman-Fried has been scheduled for Oct. 2, 2023. He has pleaded not guilty to all charges.