- SEC announces settled charges against Galois Capital for custody failure and crypto assets being offered and sold as securities.
- Galois Capital held crypto assets in trading platforms, including bankrupt FTX exchange, that is not a qualified custodian.
- The firm settled charges without admitting or denying SEC charges for a $225,000 civil penalty, per SEC press release.
Securities & Exchange Commission (SEC) published a press release announcing settled charges against a former registered investment advisor Galois Capital Management LLC. The US financial regulator charged the firm for custody failure and the offer and sale of crypto assets as securities.
Galois Capital’s official X account tweeted about SEC’s actions and said that the firm had used Fireblocks, a non-qualified custodian and informed the regulator about the same in a filing.
SEC files settled charges against Galois Capital
SEC press release dated September 3 shows that the US financial regulator charged Galois Capital for failure to comply with requirements related to the safeguarding of client assets. The firm was held liable for “offering and selling crypto assets as securities.”
SEC mentions that bankrupt FTX exchange is among the crypto trading platforms used as custodians by the firm. The regulator alleges that Galois misled investors about the redemption period and allowed some to obtain their funds within five business days while others waited excessively longer.
In the FTX collapse of November 2022, Galois Capital’s investors lost nearly half of their crypto assets and holding funds with a non-custodian, exposing users to higher risk and resulting in higher losses.
A civil penalty of $225,000 was imposed on Galois Capital. The funds will be used to settle the SEC charges and distributed to investors who were harmed in the process.
Galois Capital slams SEC, says no good deed goes unpunished
The former investment adviser firm explains in an official tweet thread on X, that investors were “allowed out of the fund earlier if they didn’t want to be there,” and said that the SEC’s actions meant, “no good deed goes unpunished.”
Even as the firm faces civil penalty for using a firm that was a non-custodian, Galois Capital believes that Fireblocks was the best solution for their needs at the time and it was the safest way to secure crypto for investors. The firm shared details of their use of Fireblocks for the custody of user funds, in Form ADV filing with the SEC.
After an exhaustive and costly investigation of nearly two years, and without admitting or denying the findings detailed in the SEC’s order, we agreed to settle with the SEC and pay a $225,000 penalty which will go directly to our investors.
— Galois Capital (@Galois_Capital) September 3, 2024
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
IRS says crypto staking should be taxed in response to lawsuit
The IRS stated that rewards from cryptocurrency staking are taxable upon receipt, according to a Bloomberg report on Monday, which stated the agency rejected a legal argument that sought to delay taxation until such rewards are sold or exchanged.
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode
Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.
Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses
Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.
Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery
The global cryptocurrency market cap shrank by $500 billion after the Federal Reserve's hawkish statements on December 17. Amid the market crash, Bitcoin price declined 7.2% last week, recording its first weekly timeframe loss since Donald Trump’s re-election.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.