The leadership of the cryptocurrency-focused hedge fund Galois Capital has decided to close the fund after events surrounding the FTX bitcoin exchange. The Financial Times reports.
“Given the seriousness of the situation with FTX, we do not think that continuing to manage the fund both financially and culturally is sensible. […] I am terribly sorry about the current situation we find ourselves in,” said Kevin Zhou, co-founder of Galois, in an internal note.
In November 2022, representatives of the hedge fund told CoinDesk that about $40 million had been blocked in FTX — roughly half of Galois’s funds. At that time, in a letter to investors, the management explained that recovering “some percentage” of assets could take “several years”.
“This entire tragic saga, from the collapse of LUNA to the crisis of 3AC [Three Arrows Capital] and the fall of FTX/Alameda, has undoubtedly set the crypto space back considerably. Yet I still hold out hope for the long-term future of cryptocurrency,” Zhou said.
According to Crypto Fund Research, the cumulative losses of crypto funds from FTX’s bankruptcy could amount to up to $5 billion.
In February 2023, investors in the exchange filed a lawsuit against venture and private investment firms, including Sequoia Capital, Thoma Bravo and Paradigm, for creating an “aura of legitimacy” around FTX.