Galois Capital, one of the largest cryptocurrency hedge funds, has been forced to shut down its operations after losing a large portion of its assets, due to the bankruptcy of the FTX exchange. The company will have to pay back investors’ money on the remaining assets in its possession, according to the Financial Times.
Galois Capital ruined by FTX
With the majority of its assets stuck on the FTX exchange, Galois Capital was unable to withstand the collapse. The Financial Times report on Monday said the company had announced its closure and was in the process of repaying its investors’ funds.
In a note written by Galois Capital co-founder Kevin Zhou, the company says it is no longer able to continue its operations following a heavy loss arising from the collapse of the SBF empire.
Given the severity of the FTX situation, we believe it is not sustainable to continue our business.Kevin Zhou
Instead of engaging in a lengthy legal process under Chapter 11 bankruptcy law in the U.S., Galois Capital has chosen to sell its claims for pennies on the dollar. It will use its assets to repay 90% of its investors, and the remaining 10% will be locked up pending the conclusion of discussions with administrators and auditors.
Galois Capital confirmed the closure of its fund on Twitter shortly after the Financial Times report was published. Co-founder Zhou had previously informed investors that it would take several years to recover some of the assets frozen on FTX.
Galois Capital still believes in the future of cryptos
Despite losing nearly half of the company’s assets in the FTX disaster, Galois Capital co-founder Kevin Zhou remains confident about the future of cryptocurrencies. In a Thread, Zhou acknowledged the losses the company suffered, but also highlighted the company’s positive year-to-date performance.
Despite the FTX disaster, in which we lost almost half of our assets and sold the claim for pennies, we have managed to maintain a positive performance since the beginning of the year.Zhou’s statement
It seems that the hedge fund Galois Capital has suffered some setbacks in its investments. Indeed, the company is among the aggrieved creditors of the Mt.Gox Exchange, which has been in bankruptcy since 2014. However, it has chosen the prepayment option to recover its frozen funds before October 2023. With the hope that customers will not be forced to wait as long as the victims of Mt.Gox, the company is working to recover its assets on FTX as well.
Coming from a journalism university background, I came across Bitcoin and cryptocurrencies not long ago.
The potential of the Blockchain seduced me and I made it my research topic.