Crypto Firm Galois to Pay SEC Penalty Over Use of FTX Accounts
- Galois lost half of its client assets in 2022 in FTX collapse
- SEC says that Galois broke agency’s custody regulations
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Crypto investment firm Galois Capital Management will pay a $225,000 fine over Securities and Exchange Commission allegations that it broke rules for safeguarding client assets, including holding some of them in accounts with now bankrupt exchange FTX.
The SEC said Tuesday that in addition to breaking custody rules, Galois misled investors about how much notice they needed to give to redeem funds. The firm was a former investment adviser for a private fund that mostly invested in crypto assets. About half of the fund’s assets under management in early to mid-November 2022 were lost when FTX collapsed, the agency said.