Terra-Linked Galois Capital Lost $40 Million on FTX—Now It Must Pay the SEC a Fine Too - Decrypt
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Terra-Linked Galois Capital Lost $40 Million on FTX—Now It Must Pay the SEC a Fine Too
Galois Capital got punished twice over by the FTX collapse, now settling SEC charges related to misleading customers and mishandling assets. Galois Capital, the crypto hedge fund that famously warned of the danger
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Summary
- 💸 Galois Capital, a crypto hedge fund linked to Terra, lost $40 million due to the FTX collapse and is now facing SEC charges.
- ⚖️ The SEC charged Galois for misleading investors and mishandling customer funds, resulting in a $225,000 civil penalty.
- 🔒 Galois was criticized for using FTX to hold customer assets, which were not kept with qualified custodians.
- ⚠️ The firm allegedly misled some investors about redemption notice periods, allowing others to redeem with less notice.
- 📉 Galois's troubles highlight the fallout from FTX's collapse, as it not only lost significant assets but also faced regulatory penalties.
Top Highlights
- Terra-Linked Galois Capital Lost $40 Million on FTX—Now It Must Pay the SEC a Fine Too Galois Capital got punished twice over by the FTX collapse, now settling SEC charges related to misleading customers and mishandling assets.
- Galois Capital, the crypto hedge fund that famously warned of the dangers around Terra's LUNA and UST ahead of their 2022 collapse, has been charged by the U.S. Securities and Exchange Commission for misleading investors and for not properly safeguarding customer funds. The firm, which shut down in early 2023 after being impacted by the downfall o...
- "According to the order, Galois Capital held certain crypto assets in online trading accounts on crypto asset trading platforms, including FTX Trading Ltd., that were not qualified custodians," the press release reads. Galois appears to have landed in further hot water with the regulator for allegedly telling certain investors back in 2023 that th...
- The settlement marks something of a double whammy for the ill-fated hedge fund. Not only did Galois reportedly lose almost half of its assets due to FTX’s collapse; it has now paid up for violating American financial laws by even depositing its funds with Sam Bankman-Fried’s now-infamous exchange in the first place. While the SEC’s order found th...
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