The Financial Times said on Saturday that Galois Capital is the latest hedge fund that went off guard after nearly half of its assets were trapped on collapsed crypto exchange FTX, and the estimated amount is around $100 million.
Kevin Zhou, the co- founder of Galois said to investors in recent days that eventhough the fund had been able to extract some money from the exchange, it still had “roughly half of our capital stuck on FTX,” the paper reported, quoting a letter it had reviewed.
As per the report, Zhou stated, “I am deeply sorry that we find ourselves in this current situation”, and further mentioned that it could take “a few years” to recover “some percentage” of its assets.
Zhou wrote, “I am deeply sorry that we find ourselves in this current situation. We will work tirelessly to maximise our chances of recovering stuck capital by any means.”
On Friday, the cryptocurrency exchange FTX filed U.S. bankruptcy proceedings and its Chief Executive Officer Sam Bankman-Fried resigned from office after a rapid liquidity crisis at the group left FTX muddled to raise about $9.4 billion from investors and competitors.
FTX’s rapid fall to bottom followed heavy anticipation about its financial situation that led to $6 billion of withdrawals in just 72 hours in the beginning of this week. The company had stated an assessment of $32 billion in January this year.
FTX and Galois did not respond to Reuters’ requests for comment.
According to the industry insiders, the fact that FTX was used by so many hedge funds and often trusted as one of the world’s safest crypto currency exchanges necessarily means that many managers may have their money lingering on the exchange.
One of the industry’s biggest crypto-focused quant funds as of this summer, Galois Capital was handling more than $200mn in assets. A primary part of its trading activity is as a market maker, paving a way for it to make small profits on other investors’ trades.
