According to BlockBeats, on September 3, according to market news, the US SEC accused Galois Capital, a hedge fund focusing on cryptocurrency, of custody errors and fined it $225,000.
The SEC investigation found that Galois Capital failed to ensure that certain crypto assets held by its managed private funds were kept by qualified custodians since July 2022, violating the custody rules of the Investment Advisers Act. The company deposited some of its assets on trading platforms that were not qualified custodians, including FTX, resulting in the loss of about half of its managed assets when FTX collapsed in November 2022.
In addition, Galois Capital told some investors that redemptions required five business days’ notice, but actually allowed other investors to redeem in a shorter time, which constituted misleading behavior. Corey Schuster, co-director of the SEC’s asset management division, emphasized that advisors who violated core investor protection obligations will continue to be held accountable. Galois Capital agreed to stop the violations and accept the censure, but did not admit or deny the SEC’s findings. The fine will be distributed to the harmed investors.
