FTX truly is the gift that keeps on giving in all of the bad ways imaginable; this week’s latest victim to fall from the calamity that is the FTX scandal is none other than Galois Capital.
Galois Capital made headlines last year when they revealed they had an exposure of more than $40 million when the FTX story first broke. Since then, they have been able to recount only a fraction of the initial investment they had made in FTX and now disgraced CEO Sam Bankman-Fried.
Will Galois Capital Ever Get its Investment Back from FTX?
Recovery looks like a long and hard road for Galois Capital as they officially announced this week that they indeed would be shuttering their doors, just like the long list of other FTX investment firms who also had to follow suit due to their own exposures to FTX.
It seems that the biggest victims of the FTX debacle are small firms with large investors.
After losing nearly half of its capital during the collapse of Sam BankmanFried’s FTX, the confirmation of Galois’s shuttering of their doors came after the Financial Times (FT) published news regarding the closing of the crypto-focused quantitative fund.
In a Twitter post, Galois Capital cofounder Kevin Zhou went on to give his two cents regarding the situation and, ultimately, their relationship with FTX, commenting:
“I appreciate the outpouring of support today when the FT article came out.
“Thank you all for the kind words. Yes, it is true that our flagship fund is shutting down.”
Galois Capital has offloaded its bankruptcy claims for a measly 16 cents on the dollar, according to the FT report. The firm is also returning its remaining capital to the investors.
Zhou also said: “Although this is the end of an era for Galois, the work we have done together for the past few years has not been in vain.
“I can’t say more than this for now. Stay tuned.”
The report says that Galois Capital had about $200 million in assets under management.
Galois Capital co-founder Kevin Zhou says that the “severity of the FTX situation” had made it untenable to “continue operating the fund both financially and culturally.”
How Much Will Investors Get Back?
The hedge fund’s investors will get 90% of the funds that are not stuck on FTX, while the remainder will be withheld temporarily pending discussions with the auditor and administrators, per the report.
According to the Financial Times, Galois Capital opted to sell its claim on FTX for approximately $0.16 on the dollar instead of waiting for a resolution from the bankruptcy court. FTX filed for Chapter 11 bankruptcy in November last year.
While expressing hope that crypto will survive, the hedge fund says that despite the huge losses triggered by the collapse of FTX, its returns since the firm started are in positive territory.
Galois Capital Co-Founder Remains Positive
“In spite of that, 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-date performance which is still positive…
Crypto will endure. These setbacks are temporary and will come to pass.”
What do you think, dear reader? Was the loss of yet another crypto firm all in the name of the greater good? Or is this yet another sign of corporate greed and the love of profit over common sense operations?
Well, it looks like we will never know, or maybe we will. Galois Capital could be picked up by a larger fish and made into something sustainable but significantly trimmed down like Celsius.
