Crypto Hedge Fund Galois Calls It Quits Citing Millions Trapped in Failed FTX

Crypto Hedge Fund Galois Calls It Quits Citing Millions Trapped in Failed FTX
  • It is estimated that the hedge fund lost more than $100 million in the FTX fiasco.
  • Galois founder and former Kraken employee Kevin Zhou made headlines last year for predicting the fall of Terra Luna.

Following the collapse of FTX, one of the largest crypto-focused quant trading platforms and a top market maker has been forced to shut down operations, claiming it has about half of its capital stuck in the bankrupt exchange.

Galois Capital wrote to investors on Saturday in a letter seen by the Financial Times that it lost an estimated $100 million in FTX. It promised to return the remaining funds – not with the exchange – to the creditors.

“Given the severity of the FTX situation, we do not think it is tenable to continue operating the fund financially and culturally,” Galois co-founder Kevin Zhou wrote. “Once again, I am terribly worried about the current situation we find ourselves in.”

According to the letter, clients would receive 90% of the available funds, and the remaining 10% would be paid once the audit and administration processes are finalized. To quicken the recovery, Zhou said that the hedge fund prefers selling the claims instead of going through the lengthy bankruptcy process, which he says could take more than a decade.

Predicted the fall of Terra Luna, Zhou fell victim to the FTX demise

Zhou is a former employee at Kraken known for predicting the collapse of Terra Luna and warning investors not to invest in the TerraUSD stablecoin before the $40 billion downfall. The investor is now lamenting falling victim to the FTX meltdown.  However, in the letter, he expressed optimism in the crypto space despite the volatility.

“This tragic saga starting from the Luna collapse to the 3AC credit crisis to the FTX/Alameda failure has certainly set the crypto space back significantly,” he wrote, adding that he “remains hopeful for crypto’s long-term future.”

How quickly the creditors in the collapsed exchange FTX would recover their money remains unclear. In the most recent events, Voyager Digital has subpoenaed former FTX executives – Sam Bankman Fried, Samuel Tarbucco, Nishad Singh, Gary Wang, and Caroline Ellison – to appear before a bankruptcy court regarding the failed attempt by the exchange to acquire the bankrupt crypto lender (Voyager.) It comes amid a counter lawsuit by FTX against Voyager seeking to recover over $400 million. FTX’s founder Sam Bankman-Fried is awaiting trial related to fraud charges in October, for which he has pleaded not guilty.

Risa Skyes
Skyes is a Senior Editor at CoinJot with a remarkable passion for Blockchain, Crypto, Metaverse, NFTs, and All things Web 3.0. Risa.Skyes [at]