After Losing $40 Million To FTX, Crypto Hedge Fund Galois Capital Has Closed Down

Galois Capital, a hedge fund that was affected by the FTX collapse, has decided to close down after approximately 50% of its assets became stuck in the insolvent exchange. In a tweet from its official account on November 12, 2022, the fund acknowledged its considerable exposure to FTX. It will now distribute its remaining assets to investors.

A letter to investors from Galois Capital, as reported by the Financial Times, stated that the fund suspended all trading and rolled back its positions. Co-founder Kevin Zhou expressed regret to investors and acknowledged that the severity of the FTX situation precludes continuing operations.

The hedge fund will return 90% of available funds, which are not trapped in FTX, to investors. The remaining 10% will be held temporarily while final discussions take place.

In addition, Zhou expressed a preference for selling the hedge fund’s claims instead of waiting for a lengthy bankruptcy process that could take up to ten years.

He believes that buyers of these claims are better positioned to pursue claims in bankruptcy courts.

Millions of dollars of company funds, including those of firms such as New Huo Technology and Nestcoin, were frozen due to the FTX bankruptcy.

Galois Capital is one of the numerous victims of the FTX situation, with at least $50 million of its funds trapped in the exchange. Similarly to Galois Capital, the biggest Mt. Gox creditor has also opted for an early payout rather than waiting for a lengthy legal process that could take years. 

On February 17, the Mt. Gox Investment Fund announced its decision to receive payment in September rather than waiting any longer for the return of its assets.