Galois Capital’s Turbulent Journey
In a striking turn of events, Galois Capital, a hedge fund that once boasted significant influence in the crypto trading sphere, has decided to close its doors after the disastrous collapse of the FTX exchange. With half of its assets trapped in the volatile realm of bankrupt exchanges, the fund has opted to return what little remains to its investors — an unfortunate end to a once-promising institution.
Facing the FTX Crisis
On November 11, 2022, Galois Capital took to Twitter and admitted to having a substantial amount of funds stuck at FTX. This bold yet candid move was both a gamble and a desperate cry for understanding. Kevin Zhou, the hedge fund’s co-founder, didn’t sugarcoat the situation when he stated,
“For the record, yes we did have significant funds stuck on FTX. No, we did not use any Bahamian method to move funds out.”
The transparency may have been too little, too late.
Halting Operations and Returning Funds
According to an official correspondence reported by the Financial Times, Galois Capital announced a full stop on trading activities. Zhou extended his heartfelt apologies to investors in a letter, explaining that the grim severity of the FTX disaster left no option but to cease operations. In a last-ditch effort to provide some solace, investors will receive 90% of the assets that aren’t languishing in the FTX purgatory. The remaining 10%? That’s a bit of insurance and will be held temporarily while discussions unfold.
The Claims Game
In a strategic pivot amidst the wreckage, Zhou has expressed a preference for selling off the hedge fund’s claims rather than undergo what he confidently suggests could be a protracted bankruptcy battle. The co-founder posits that other buyers are more adept at navigating the complexities of bankruptcy courts, potentially allowing for a quicker resolution.
For context, this tactic is not unprecedented; many are opting for the early payout route, as seen with the largest Mt. Gox creditor recently choosing expedience over the slow churn of the legal process.
The Ripple Effect of FTX
Galois Capital is only one of many casualties in the FTX debacle, with other companies like New Huo Technology and Nestcoin suffering similarly devastating losses. With at least $50 million in funds tethered to the exchange, Galois’s situation shines a harsh light on the risks embedded within the crypto landscape.
In the face of adversity, the crypto community is left to wonder: How many more will follow suit in this ongoing saga? Only time will tell.
