Major Hedge Fund Galois Forced to Close Doors as 50% of Assets Remain Trapped at Crypto Exchange FTX

Galois co-founder Kevin Zhou has stated that the fund is no longer operational and has halted all trading since it is no longer sustainable after the FTX incident. Galois Capital, one of the largest crypto-focused quantitative funds, has reportedly informed its investors that it has stopped all trading and unwound all of its positions due to the lack of viability.

Fund that made money betting against cryptocurrency LUNA closes for losses in FTX
Crypto hedge fund Galois Capital to close its cryptocurrency operations pic.twitter.com/WlRChMYz51

— Bradicoin (@Bradicoin10) February 21, 2023

Galois Capital managed around $200 million in assets last year. However, due to the financial and cultural impact of the FTX crisis, the fund is no longer sustainable. Co-founder Kevin Zhou has apologized for the current circumstances and believes that it is not feasible to manage the fund, given the complexities of the FTX situation, on both financial and cultural levels.

90% of funds held by hedge fund galois capital that were not engulfed by ftx will be distributed to investors while the company keeps 10% until further discussions and decisions are made galois is one of the firms that invested a huge amoun

— Trevyn Palmisano (@TrevynPalmisan3) February 21, 2023

When the cryptocurrency exchange FTX collapsed, Galois had half of its assets remaining on the platform. Sam Bankman-Fried, the founder of the company, has not entered a plea for fraud charges that are set to be heard in October. FTX’s Delaware bankruptcy has listed up to one million creditors.

Galois Capital Chooses to Repay Investors Instead of Pursuing Lengthy Legal Proceedings

Galois assured its clients in a letter that 90% of their funds would be restored when the fund was liquidated, provided they weren’t stuck on FTX. While discussions with administrators and auditors were ongoing, the remaining 10% would be withheld for the time being. However, Galois has decided to cease operations and repay its investors.

🚨🚨🚨 HEDGE FUND CLOSES AFTER LOSING FUNDS IN FTX EXCHANGE: GALOIS CAPITAL TO RETURN 90% TO INVESTORS

Galois Capital, one of the hedge funds affected by the collapse of FTX exchange, has decided to shut down and return its remaining assets to investors.

(unrelated GIF) pic.twitter.com/r3ohA0vkcB

— CryptoCognition (@CryptoCognite) February 21, 2023

Zhou stated that selling the fund’s claim on FTX was more desirable than going through a lengthy legal process. He highlighted that bankruptcy proceedings could last for over ten years and that buyers of such claims who were in distress were better suited to file lawsuits in bankruptcy court.

On February 20, the fund made an earlier announcement that it was closing down due to the loss it incurred as a result of FTX’s collapse the previous year. Galois Capital will refund its investors their remaining investments. The Financial Times reported that Galois Capital plans to close the company and then return all of its investors’ money.

Galois Capital shuts down after losing half their money in FTX

February 20, 2023https://t.co/TwnqePt2fQ pic.twitter.com/X4uEVQ44on

— web3 is going just great (@web3isgreat) February 22, 2023

Papers obtained by the Financial Times reveal that the company informed its investors that it had ceased all trading. The hedge fund stated in a statement to its customers that 90% of the money, which was not locked in FTX, will be refunded to investors. As per reports, the remaining 10% will be retained by the fund until all negotiations with auditors, administrators, and other stakeholders are completed.