Another victim of the FTX scandal
San Francisco-based hedge fund Galois Capital has gone out of business. This is information reported by the very serious FinancialTimes which indicates that the company closed its trading services because of FTX’s financial problems occurred at the end of last year.
In effect, the hedge fund had injected $100 million of its capital in the exchange platform that went bankrupt. Recall that Galois Capital managed assets worth an estimated $200 million. Losses today are estimated at $40 million following this collapse.
However, the investment company has assured that its clients will receive 90% of their funds that have not been invested on the exchange platform. It will need to wait for the work of the auditing firms and its administrators to be completed to transfer the remaining 10% of the funds to the clients.
Closure rather than bankruptcy
Kevin Zhou, the co-founder of the hedge fund has apologized to customers for the inconvenience the decision to close will cause. However, he noted the need to make this decision given the company’s financial condition.
Kevin Zhou explained the reason for the decision to close rather than bankrupt the company. According to him, it is the best alternative for everyone. The legal bankruptcy process is long and causes huge delays in repayment. Customers who are already going through a tough ordeal shouldn’t wait too long to get their money back, the co-founder said.
The year 2022 has been particularly difficult for the cryptocurrency sector. Many projects have experienced catastrophic setbacks such as the collapse of FTX, the crash of Terra or even the closure of 3AC. Zhou is well aware of this, but he remains hopeful for the future of crypto.
The FTX contagion has taken its toll
The importance of the FTX platform in the crypto universe was well established. This is seen even more now that several entities are feeling the effects of its collapse.
The list of victims may extend with Galois Capital, but other prestigious companies have been buffeted by this unfavorable wind. We think in particular of American hedge fund Tiger Global Management or the asset management company BlackRock.
The bankruptcy of FTX combined with that of Celsius caused heavy financial losses for Midas Investmentsthe cryptocurrency platform that closed at the end of 2022.
The head of the platform then said that he hoped to be able to allow unhappy investors to return to their funds. He plans to create a new project that will carry a native token called MIDAS.