Hedge fund closes operations after losing funds in FTX exchange: Report
Hedge fund Galois Capital, one of the victims of the FTX collapse, has thrown in the towel after half of its assets got trapped in the bankrupt exchange. The fund has finally decided to shut down and return its remaining assets to investors.
On Nov. 12, the hedge fund admitted in an announcement from its official Twitter account that it had significant exposure to the FTX exchange.
For the record, yes we did have significant funds stuck on FTX. No, we did not use any Bahamian method to move funds out.
— Galois Capital (@Galois_Capital) November 11, 2022According to a report by mainstream media outlet Financial Times, the fund has now told investors in a letter that all trading was halted and the fund rolled back its positions. Kevin Zhou, the co-founder of Galois Capital, apologized to their investors and pointed out that the severity of the FTX situation makes them unable to justify continuing its operations.
In addition, the hedge fund said that investors will receive 90 percent of the available funds which are not trapped in the FTX exchange. The remaining 10 percent will be kept by the company temporarily until discussions are finalized.
Apart from these, Zhou also expressed their inclination to sell the hedge fund’s claims instead of waiting on a lengthy bankruptcy process that could take a decade. According to the Galois Capital co-founder, buyers of these claims are more capable of pursuing claims in bankruptcy courts.
Related: Voyager creditors serve SBF a subpoena to appear in court for a ‘remote deposition’
The FTX bankruptcy froze millions worth of company funds, including firms like New Huo Technology and Nestcoin. Galois Capital is also one of the many victims of the FTX debacle, with at least $50 million in funds stuck in the exchange.
Meanwhile, similar to Galois Capital’s approach, the largest Mt. Gox creditor has also chosen an early payout option instead of waiting for a lengthy legal process that could potentially take years. On Feb. 17, Mt. Gox Investment Fund said that it chose to be paid in September instead of waiting longer to get its assets back.