Galois Capital Shuts Down After Losing Funds in FTX Collapse

Galois Capital is another hedge fund that has become one of the most prominent victims of the FTX collapse. According to the Financial Times, it has decided to shut down and cash out investors.

Last year, Galois Capital managed around $200 million in assets. According to documents obtained by the Financial Times, it told investors that it had halted all trading. Additionally, the platform reportedly closed all positions as it was no longer sustainable. However, wait for the official announcement.

On November 12, 2022, the hedge fund admitted that it had significant exposure to the FTX exchange in an announcement on its official Twitter account.

The fund has now sent a letter informing investors that all trading has halted and the fund has reduced positions, according to the Financial Times. Galois Capital co-founder Kevin Zhou apologized to his investors, noting that the seriousness of the FTX situation prevented them from justifying continuing operations.

Additionally, investors are getting 90% of their available funds not trapped on the FTX exchange, the hedge fund said. The remaining 10% will be temporarily reserved by the company pending final discussions.

Among other things, Zhou also expressed that he would rather sell the hedge fund’s assets than wait for a lengthy bankruptcy process that could take a decade. According to the co-founder of Galois Capital, buyers of these receivables are better placed to pursue claims in bankruptcy court.

Galois Capital Joins List of Firms Affected By Crypto Fallout

The FTX bust froze millions in corporate funds, including companies like Xinhuo Technology and Nestcoin. Galois Capital was also one of the many casualties of the FTX crash as at least $50 million in funds were stranded on the exchange.

Three Arrows Capital was one of the first in a long line of failures over the past year. In May 2022, the demise of the Terra Luna and TerraUSD cryptocurrencies destroyed the Three Arrows. While 3AC owes creditors about $3 billion, FTX is another nail in the coffin.

According to Zhou, the collapse of FTX/Alameda and 3AC’s credit problems have undoubtedly set back the encryption space.