Cryptocurrency-focused hedge fund Galois Capital will close and return the remaining funds to investors after losing US$40 million worth of assets in the collapse of crypto exchange, the Financial Times reported on Monday.

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Fast facts

  • Galois had halted all trading and closed out all positions. The hedge fund’s clients will receive 90% of the funds that are not trapped in FTX, and the remaining 10% will be withheld until discussions with administrators are finalized.
  • Galois reportedly sold its claim for 16 cents on the dollar as the legal process to recoup the funds was likely to last for more than a decade, and buyers of such distressed claims have greater expertise in pursuing such claims in court.
  •  “This entire tragic saga starting from the Luna collapse to the [Three Arrows Capital] credit crisis to the FTX/Alameda failure has certainly set the crypto space back significantly,” wrote Galois co-founder Kevin Zhou in a letter to investors seen by the Financial Times. “However, I, even now, remain hopeful for crypto’s long-term future.”
  • Galois managed roughly US$200 million in assets at one point last year. The firm reportedly had around half of its assets trapped at FTX when it collapsed.
  • FTX filed for Chapter 11 bankruptcy on Nov. 11, and its founder and former chief executive Sam Bankman-Fried is currently under house arrest at his parent’s residence in California on charges of securities fraud, wire fraud, conspiracy, money laundering, and violating campaign finance rules.
  • Bankman-Fried has pleaded not guilty to all charges, and the date of his first trial has been set for Oct. 2, 2023.

See related article: Sam Bankman-Fried pleads not guilty to fraud charges in FTX exchange collapse