Crypto hedge fund Galois Capital shuts down, thanks to FTX collapse
Popular crypto hedge fund Galois Capital is closing shop after operating in the crypto space for six years. The fund announced earlier on 20 February that it was shutting down due to the loss it faced after the collapse of FTX last year.
Six years, one huge mistake.
“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.”
As one of the largest crypto-focused quantitative funds, Galois went from managing nearly $200 million in assets to reportedly losing $40 million in FTX.
The LUNA crash did affect our BYT holdings on Cosmos, even after selling our LUNA stake near the top, the contagion from the UST crash affected the whole market. We didn't have a single cent in FTX or any related projects.
Galois articles on Medium are very thin for the last 3 years - mainly on Twttr. But we see they are heavily into AMMs and possibly why they even bothered using FTX.
As a fund manager, I wouldn't trust any single platform. is more effort, but so what!
FTX Bankruptcy Claims Sell for 20 Cents on the Dollar in Private OTC Markets
The sales suggest distressed asset funds are projecting recoveries of about $0.50 over five years.
https://www.coindesk.com/business/2023/02/20/ftx-bankruptcy-claims-sell-for-20-cents-on-the-dollar-in-private-otc-markets/
Galois claims they got 16 cents.
a market for everything!
https://app.x-claim.com/marketplace/24karqyfs?page=1&resetSelection=false&sortDirection=desc&sortField=amount_cents
mmm... that site also quotes 16%, or 16 cents to the $.
one claim $323m posted just today.
Seen some interesting - and some wrong - calcs as to how this distress market is priced.
Legal wheels churn slowly, so the assumptions I've seen are that 50 cents to the $ may be recovered within 5 years. So buying at 20 cents means a 30 cents profit after 5 years. hence I've then seen people calc this as 30/5 = 6% pa yield. erm... that's wrong.
Buying at 20 and then selling at 50 is a 150% yield, annualised over 5 years comes to 30% pa! That's much nicer given the huge risks.
If the return is only 30 cents, then that yield drops to just 10% pa.