As a seasoned crypto investor with a decade-long journey under my belt, I’ve seen my fair share of ups and downs in this ever-evolving market. The recent news about Galois Capital being charged by the SEC for mishandling funds and providing false information is a stark reminder of why due diligence and caution are essential when choosing where to park our hard-earned digital assets.
It’s been alleged that Galois Capital, by the United States Securities and Exchange Commission (SEC), for mishandling client investments and providing deceptive information to its customers.
In 2022, the hedge fund drew attention for cautioning against investments in Terra’s LUNA and UST. However, currently, it’s dealing with legal complications due to alleged non-compliance with regulatory standards.
SEC investigated Galois Capital and found that the company had stored its customers’ crypto assets on several trading platforms, including the now-bankrupt FTX exchange.
Based on the SEC’s announcement, these platforms do not fall under the category of qualified custodians, which are typically registered broker-dealers or banks. By not utilizing a properly regulated custodian, investors’ assets may be exposed to significant risks such as loss or misuse.
After FTX’s collapse in November 2022, a loss of $40 million occurred for Galois Capital, leading to its shutdown in the early months of 2023.
Additionally, the Securities and Exchange Commission found out that the hedge fund provided ambiguous details to certain investors regarding the withdrawal process for their investments.
The company informed certain customers that a minimum of five business days’ advance notice was required to withdraw their funds, whereas other clients were granted the flexibility to make withdrawals with shorter notice.
Despite Galois neither confirming nor denying the Securities and Exchange Commission’s allegations, they consented to a fine of $225,000 to resolve the claims. This amount will be distributed among the investors who suffered losses as a result.
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2024-09-04 01:59