Crypto Hedge Fund Galois Capital to Shut Down due to FTX Losses

Crypto hedge fund Galois Capital is winding down its operations after having lost roughly half of its assets to FTX.

16 Cents on the Dollar

The crypto industry is still dealing with the fallout from the FTX crisis.

Crypto hedge fund Galois Capital announced that it would be shutting down its services due to losses incurred in the FTX collapse. Despite managing to pull some funds, the firm still had almost half of its assets stuck on the exchange when it completely froze withdrawals.

“Given the severity of the FTX situation, we do not think it is tenable to continue operating the fund both financially and culturally,” co-founder Kevin Zhou told investors. “Once again I’m terribly sorry about the current situation we find ourselves in.”

According to the Financial Times, Galois managed around $200 million in assets in 2022. The hedge fund indicated that clients would receive 90% of the funds that were not locked on FTX, while the remaining 10% would be temporarily held back until discussions with auditors were finalized. 

Galois sold its FTX claims for approximately 16 cents on the dollar, with Zhou explaining to investors he preferred selling the claims early instead of going through a multi-year bankruptcy process. 

Zhou took to Twitter to confirm the report. “I am proud to say that although we lost almost half our assets to the FTX disaster and then 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,” he posted, before hinting that other Galois-related projects were in the works. 

Zhou distinguished himself in the crypto sphere when he repeatedly voiced his concerns about the stability of Terra’s algorithmic stablecoin UST weeks before it collapsed. Galois Capital was also one of the main entities calling on miners to fork Ethereum when it transitioned to Proof-of-Stake in order to keep a Proof-of-Work chain going. 

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.