The hedge fund Galois Capital decided to close and return 90% of the funds not trapped in FTX to customers

On February 20, it was reported that the hedge fund Galois Capital decided to stop all transactions, close all positions, and return 90% of the funds not trapped on the FTX to customers after closing the fund, while the remaining 10% will be temporarily suspended until it is determined after discussion with the managers and auditors. Kevin Zhou, its co-founder, said, “Given the seriousness of the FTX situation, we think it is untenable to continue to operate the fund financially and culturally.” He said that he would rather sell the fund’s claims on FTX than go through a lengthy legal process. Since Galois sent the letter, it has sold its debt for about 16 cents.

Interpretation of this information:

The message reports that Galois Capital, a hedge fund, has announced its decision to stop all transactions, close its positions, and return 90% of the funds not trapped on the FTX exchange to customers. The remaining 10% will be suspended temporarily until the managers and auditors can determine their outcome through discussion. The reasons given for this decision were the seriousness of the FTX situation, which was deemed financially and culturally untenable. Rather than going through a lengthy legal process, the co-founder, Kevin Zhou, stated that he would prefer to sell the fund’s claims on FTX. The debt was later sold for approximately 16 cents.

This message suggests that the FTX situation was serious enough for Galois Capital to halt all transactions and close positions. It is possible that the FTX situation created an unmanageable financial and cultural environment in which the fund could not operate. Kevin Zhou’s preference for selling the fund’s claims on FTX may indicate that the legal process would not have yielded a satisfactory outcome for Galois Capital. Furthermore, the sale of debt for approximately 16 cents may indicate that the fund was not able to recover the full value of its investment in FTX.