As a seasoned crypto investor with a decade-long journey under my belt, I can’t help but feel disapproach the recent news about Galois Capital with a heavy heart and a critical eye. The SEC’s charges against this Florida-based firm for compliance failures and investor misrepresentation are a stark reminder of why due diligence is an absolute must in the wild west that is crypto.
The Securities and Exchange Commission (SEC) in the United States has penalized Florida-based Galois Capital for severe regulatory noncompliance, and addressed instances of investor misconduct.
The firm’s reluctance or refusal to comply with required regulations, including potential deceit of custody practices and misinformation regarding redemption policies.
SEC’s Custody Rule: The SEC’s Custody Rule dictates that clients’ assets, such as the ones being offered and sold as securities, should be kept under the care of a qualified custodian.
Since July 2022, the Securities and Exchange Commission (SEC) has yet to deem Galois Capital compliant with their regulations regarding cryptocurrencies, trading activities, or platform listings such as FTX, in other words, these entities have not been deemed qualified for these specific roles.
The suspension of custodial practices within FTX occurred in November 2022, resulting in significant losses due to almost half of their assets being managed during the collapse of FTX in November 2022.
Misleading investors
Besides failing to fulfill their responsibilities in custody matters, the SEC also discovered that Galois Capital provided incorrect information to investors about the processes for redeeming investments.
As per the SEC’s disclosure, the company has notified certain investors that they must provide a redemption notice at least 5 working days prior to the end of each month, whereas other investors have been granted the option for a quicker redemption within shorter notice periods.
1. Investor’s Perspective: An investor is a person who invests money into a financial instrument or market, with the aim of earning profits from that investment.
1. Compliance – Adhering to or being in agreement with certain rules, regulations, or guidelines set by a governing body, such as the Securities and Exchange Commission (SEC).
Corey Schuster, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.
The Penalty Fund’s Harmonized Investors, or in simpler terms, Penalty Fund Investors (PFIs) are individuals or entities that receive financial benefits from a specific source, such as a government agency, a private company, or an organization. These investors benefit from the same source and share the same revenue stream. The specific source could be a country’s budget, a particular department within a government, a specific sector of a private company, or a specialized area of an organization.
The Securities and Exchange Commission (SEC) is a regulatory body in the United States that oversees trading on securities exchanges, such as the New York Stock Exchange (NYSE). The SEC’s role includes setting and enforcing rules and regulations for fair and transparent markets, protecting investors from fraud or manipulation, ensuring market integrity, and promoting efficient and effective trading.
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2024-09-03 19:48