Galois Capital Shuts Down After FTX Collapse

Galois Capital Closure

Galois Capital, a prominent crypto hedge fund known for its expertise in over-the-counter trading and algorithmic market-making, has announced its closure. This decision comes in the wake of losing nearly half of its funds due to the collapse of the crypto exchange FTX. The fund had approximately $50 million stuck on FTX, leading to its operational shutdown.

Impact of FTX Collapse

The downfall of FTX in November 2022, triggered by a surge in customer withdrawals and a shortfall in assets, had a significant ripple effect across the crypto industry. On the day of FTX's collapse, Galois Capital disclosed its substantial financial exposure to the exchange. Three months later, the fund has decided to cease operations permanently.

Customer Refunds and Financial Strategy

Before completely winding down, Galois Capital plans to refund up to 90% of the funds not held on FTX to its customers. The remaining 10% will be retained until the completion of the company’s auditing process. In a strategic move, the hedge fund also sold its claims for approximately 16 cents on the dollar to recoup some losses.

Optimism for Crypto's Future

Despite the setbacks, Galois Capital remains optimistic about the long-term prospects of the crypto industry. In a final message, the fund expressed its belief that the challenges are temporary and encouraged stakeholders to remain resilient. The founder, Kevin Zhou, hinted at potential future endeavors, suggesting ongoing commitment to the crypto sector.

Broader Industry Impact

Galois Capital's closure is part of a broader trend affecting numerous crypto companies, including Genesis Trading, Galaxy Digital, and others impacted by the FTX collapse. The situation underscores the interconnected risks within the crypto ecosystem and highlights the need for robust financial strategies to withstand such crises.