Galois Capital Hit with SEC Charges Over Custody Issues

So, the SEC just announced that Galois Capital Management LLC, a Florida-based firm that used to advise on a private fund focused on crypto, is in trouble for not safeguarding client assets properly. Apparently, they were also misleading investors about how much notice they needed to give for redemptions. To wrap this up, Galois is coughing up $225,000 to settle up, and that cash is gonna go to the investors who got hurt. Starting from July 2022, Galois Capital didn’t make sure that some of the crypto assets in their managed fund were kept with a qualified custodian, which is a big no-no under the Custody Rule of the Investment Advisers Act. They were holding these crypto assets in online accounts on trading platforms like FTX, which aren’t considered qualified custodians. When FTX crashed in November 2022, about half of the fund's assets went poof. Plus, the SEC found that Galois misled some investors by saying they needed to give five business days' notice for redemptions when they were actually letting other investors redeem with less notice.