Galois Capital is closing its doors after half its assets are still trapped on crypto exchange FTX.
The crypto hedge fund managed US$200 million last year and was one of the biggest crypto-focused quantitative funds.
On Monday, the firm confirmed it was shutting down after the Financial Times reported half of its assets were locked on Sam Bankman-Fried's defunct exchange.
"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," the firm tweeted.
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 (@Galois_Capital) February 20, 2023
In a letter to investors, co-founder Kevin Zhou said “Given the severity of the FTX situation, we do not think it is tenable to continue operating the fund both financially and culturally. Once again I’m terribly sorry about the current situation we find ourselves in.”
Galois sold its claim for approximately 16 cents on the dollar.
Zhou also said the firm would return 90% of the remaining money in the fund whilst 10% is temporarily held back whilst it is still to be finalized by administrators.
“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-to-date performance which is still positive,” Galois said on Twitter.
Zhou is known for shorting Luna last year but remains optimistic about the space. “This entire tragic saga starting from the luna collapse to the 3AC [Three Arrows Capital] credit crisis to the FTX/Alameda failure has certainly set the crypto space back significantly,” wrote Zhou. “However, I, even now, remain hopeful for crypto’s long-term future.”