Tyr Capital Faces Swiss Justice Over FTX

Swiss hedge fund Tyr Capital Partners is suffering the repercussions of its close links with FTX, the crypto exchange platform that abruptly went bankrupt in November 2022. Following a complaint from an investor, the Geneva public prosecutor’s office ordered a search of Tyr’s premises on suspicion of “criminal management”.

The resounding bankruptcy of FTX continues to reveal its cascading repercussions. Tyr Capital Partners, a company that was once exposed to the defunct exchange, is facing an investigation in Switzerland following the filing of a criminal complaint by its client TGT. The latter accuses the hedge fund of “criminal mismanagement”, and obtained a search of its premises.

TGT is seeking to recoup its investments in Tyr Capital, including a $22 million claim on FTX, now in bankruptcy. Having lost confidence, the plaintiff also claims an independent investigation and the closure of its accounts.

According to legal documents quoted in the Financial Times, Tyr Capital Partners exceeded its limits shortly before the collapse of FTX.

The fund allegedly failed to comply with its risk management procedures, with more than 15% of its assets invested in FTX. It is also accused of slowness, having attempted to withdraw his funds from FTX too late, on November 11, 2022, the very day of the bankruptcy filing.

Tyr Capital Partners, with $140 million in assets under management, denies any wrongdoing on its part, claiming it was operating within legal limits.

A long-simmering affair

From August 2022, TGT was concerned about the hedge fund’s risky strategy.

In April 2023, the plaintiff took action by filing a complaint for “criminal management”, leading to the search.

The chief investment officer Edouard Hindi is at the heart of the suspicions, accused of inaction despite warnings about the health of FTX before it fell. Swiss justice considered these suspicions sufficiently serious to order the search. The investigation is continuing, with serious risks for Tyr Capital Partners.

This court case is yet another example of the knock-on effects of the FTX collapse.