$200 Million Galois Crypto Hedge Fund Shuts Down as Half of Assets Stuck on FTX Exchange – This is What Happened

cryptonews.com:

Crypto hedge fund Galois Capital has closed its flagship fund after losing almost half of its capital in the FTX collapse, and later selling the claim to the assets.

The hedge fund confirmed the news in a Twitter thread on Monday where it said “it is true that our flagship fund is shutting down.” It added that it lost almost half of its assets in the FTX collapse, and that it later “sold the claim for cents on the dollar.”

“[…] we are among the few who are closing shop with an inception-to-date performance which is still positive,” the hedge fund said, while calling the closure “the end of an era for Galois.”

The news of the fund’s closure was first reported by the Financial Times on Monday. According to the newspaper, fund investors had at that time already received a letter that said all trading was halted, and that open positions were being rolled back.

In the letter to investors, Galois Capital’s co-founder Kevin Zhou apologized for the situation, and said the FTX collapse meant that the fund could no longer justify to continue operating.

According to FT, Zhou further explained that the fund’s investors would receive 90% of the capital that remains available. Meanwhile, 10% would be kept by Galois Capital until further notice.

Galois Capital admitted in November last year that it had “significant funds stuck on FTX,” and that it did not attempt to use a loophole known as the “Bahamian method” to get the money out.

Despite this, Galois Capital did not give the impression at the time that it would be forced to shut down. On the contrary, the firm stressed on Twitter that investors in the fund “are still up from inception.”

Notably, Kevin Zhou has in the past said that he noticed red flags regarding the accounting practice at