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Galois has halted all trading after losing $40 million to FTX.
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The hedge fund has become the latest entity to be negatively affected by FTX’s collapse.
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The company said it would take a few years to recover some of its funds.
Galois loses $40 million to FTX
Galois, one of the leading crypto-focused quantitative funds in the world, has shut down operations. This latest cryptocurrency news comes after the company revealed that it lost a sizeable portion of its capital in the collapse of FTX.
The hedge fund’s co-founder Kevin Zhou told the Financial Times that they lost $40 million following the collapse of the FTX cryptocurrency exchange. He said;
“Given the severity of the FTX situation, we do not think it is tenable to continue operating the fund both financially and culturally. Once again, I’m terribly sorry about the current situation we find ourselves in.”
In November, the company revealed that its $40 million was stuck on the FTX platform. Back then, Zhou told investors that it would take a few years to recover some percentage of the funds. At the time, he said;
“We will work tirelessly to maximize our chances of recovering stuck capital by any means.”
FTX’s collapse continues to take more companies down
According to the Financial Times, Galois has sold its bankruptcy claims for 16 cents on the dollar. Zhou stated that
“This entire tragic saga starting from the luna collapse to the 3AC [Three Arrows Capital] credit crisis to the FTX/Alameda failure, has certainly set the crypto space back significantly. However, I, even now, remain hopeful for crypto’s long-term future.”
Since FTX’s collapse, a few companies have filed for bankruptcy. Earlier this year, the lending arm of crypto platform Genesis filed for bankruptcy, with over $3 billion in debt.
BlockFi is another company that filed for bankruptcy following its massive exposure to FTX.
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Crypto hedge fund Galois Capital has recently revealed its plans to close up shop due to losses incurred as a result of its exposure to FTX, a digital asset trading platform.
Galois Capital, a digital asset hedge fund founded in 2018, announced on November 9th that it would be wind down its operations and return capital to investors due to significant losses incurred by its exposure to FTX. While the precise amount of losses was not disclosed, the firm stated that all positions in the fund held by its investors had been closed, and that its investors would be receiving their share of the remaining assets in full “in the coming weeks.”
According to the statement, the losses are the result of Galois Capital’s exposure to FTX. FTX is a crypto derivative trading platform that provides margin and derivative-based products, such as futures and options contracts. Galois Capital announced that it had made a “strategic decision” to invest in FTX’s products and that, “what seemed like a potentially profitable opportunity turned out to be a financial disaster.”
The shutdown is a reminder that the crypto markets remain highly volatile and that investors should be aware of the risks associated with investing in digital assets. Additionally, this is a stark reminder of the importance of diversification when investing in the unpredictable digital asset space.
The news of Galois Capital’s closure comes at a difficult time for the crypto industry, with markets experiencing a recent slump prompted by the U.S. presidential election, lack of institutional capital investment, and regulatory uncertainty. However, despite the struggles, the crypto industry is still on an uptrend with predictions of continued growth and a new wave of institutional investments on the horizon.
Although the abrupt closure of Galois Capital is unfortunate, the news serves as an important reminder for investors to proceed with caution when entering the volatile digital asset space. As always, it’s important to diversify investments, remain updated on regulatory news, and have a sound risk management strategy to ensure the best chance of success.
