Galois Capital Agrees to $225,000 SEC Settlement Over Fraud Allegations Linked to FTX and Terra
- Settlement Overview: Galois Capital, once a prominent crypto hedge fund, settled with the SEC, agreeing to pay a $225,000 fine for misleading investors about redemption rules and using FTX as a custodian, which is deemed unqualified by regulators.
- Misleading Practices: The SEC found that Galois Capital selectively allowed certain investors to redeem their funds with less notice than others, violating fair treatment and transparency standards.
- FTX and Terra Exposure: Galois Capital had significant exposure to both FTX and Terraform Labs before their collapses. The firm lost $40 million when FTX failed, further compounding investor losses.
- Regulatory Crackdown: This settlement is part of the SECâs intensified crackdown on crypto firms operating without proper investor protections. The SEC emphasized the risks of using unregulated platforms like FTX for holding customer assets.
- Impact on Investors: Funds from the settlement will be distributed to former clients of Galois Capital, aiming to compensate for losses incurred due to the firm's misleading practices.
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