SEC Charges Crypto-Focused Advisory Firm Galois Capital for Custody Failures

The Securities and Exchange Commission today announced settled charges against Florida-based Galois Capital Management LLC, a former registered investment adviser for a private fund that primarily invested in crypto assets, for failing to comply with requirements related to the safeguarding of client assets, including crypto assets being offered and sold as securities. The Commission also found that Galois misled fund investors about the notice period required for redemptions. To settle the SEC’s charges, Galois agreed to pay a civil penalty of $225,000, which will be distributed to its fund’s harmed investors. The SEC’s order found that, beginning in July 2022, Galois Capital failed to ensure that certain crypto assets held by the private fund that it advised were maintained with a qualified custodian, a violation of the Investment Advisers Act’s Custody Rule.