The Securities and Exchange Commission has settled charges with Galois Capital Management LLC pertiainging to allegations for shortcomings in crypto custody.
Without admitting or denying the SEC’s findings, Galois Capital consented to the entry of an order requiring it to cease and desist from further violations of the Advisers Act, while paying a $225,000 penalty which the SEC says will be given to the fund’s harmed investors.
The SEC claims that Galois Capital failed to ensure that certain crypto assets were not held with a qualified custodian. Crypto was said to be held in online trading accounts including with FTX.
The SEC states that approximately half of the fund’s assets under management from early to mid-November 2022 were lost in connection with FTX’s collapse.
The SEC’s order also claims that Galois Capital misled certain investors by stating that redemptions required at least five business days’ notice before the end of the month while allowing other investors to redeem with fewer days’ notice.