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

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

Business Cryptocurrency
June 28, 2022 by Admin
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What were the details of the losses incurred by Galois Capital in FTX? Crypto Hedge Fund Galois Capital to Shut Down due to FTX Losses Crypto hedge fund Galois Capital has announced that it is to cease operations following significant losses resulting from a trade through cryptocurrency derivative exchange FTX. The fund, which was founded
708 crypto hedge fund galois capital to shut down due to ftx losses

What were the details of the losses incurred by Galois Capital in FTX?

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

Crypto hedge fund Galois Capital has announced that it is to cease operations following significant losses resulting from a trade through cryptocurrency derivative exchange FTX. The fund, which was founded in 2017 and boasted $100 million in assets under management, said that the losses associated with the FTX trade currently stand at around 40%.

In a statement released Wednesday, the firm said that it “made the difficult decision to close the fund” and revealed that “the majority of the losses have been borne by the fund’s founders and close affiliates.”

The statement continued:

“Galois Capital remains committed to the cryptoasset space and we are confident that the industry will continue to drive progress and innovation over the long term. We will continue to operate a more modest version of the business, but it is not our intention to return to the scale that was originally anticipated.”

Rumors that Galois Capital was struggling in the aftermath of the FTX trade had been circulating before the announcement that it was shutting down. The fund had cut staff and regulatory filings had suggested that capital had been withdrawn from the fund.

Galois fund losses
Image: Business Insider

FTX is a popular crypto derivatives exchange owned and operated by Alameda Research, which is backed by a number of high-profile investors, including former Polychain Capital partner and CoinList founder Josh Zhou and Multicoin Capital partner Kyle Samani. The exchange is known for its margin trading, futures and other complex leveraged products.

At the time of the trade, FTX offered up to 50x leverage on certain contracts, which was especially attractive to traders with large amounts of capital, such as hedge funds. FTX has since reduced the maximum leverage it offers to 30x.

Galois Capital is the latest crypto hedge fund to suffer losses due to leveraged trading on crypto exchanges, following in the footsteps of cuber Capital and Cryptolux. To avoid similar losses in future, investors and funds should ensure that they understand the risks associated with trading crypto derivatives and other complex leveraged products.