June 21, 2024

Crypto Hedge Fund Tyr Capital Faces Client Dispute and Raid Amid FTX Exposure Concerns


Crypto hedge fund Tyr Capital is entangled in a legal dispute with one of its clients, TGT, over alleged exposure to the bankrupt digital assets exchange FTX. The Financial Times reported on Tuesday that TGT has accused Tyr Capital of “criminal” mismanagement, prompting a raid by a Swiss prosecutor on Tyr’s offices.

The dispute revolves around TGT’s claim of mismanagement and seeks to close its account with Tyr Capital while attempting to recover remaining assets, including a substantial $22 million claim against FTX. FTX, once celebrated in the crypto industry, experienced a dramatic collapse in 2022 following a CoinDesk report exposing how the exchange and its sister company, Alameda Research, utilized their native FTT token to manipulate reserves. The fallout led to the unraveling of FTX founder Sam Bankman-Fried’s multi-billion dollar empire, triggering bankruptcies and a prolonged crypto market downturn.

TGT alleges that it raised concerns about FTX between November 7 and November 10, 2022. However, Tyr Capital, led by former Deutsche Bank executive Edouard Hindi, reportedly withdrew its assets from FTX only on the day the exchange filed for bankruptcy, as per a court filing cited in the report.

The client, TGT, invests funds from other companies, including crypto platform Yield. TGT claims that Tyr Capital ignored an internal risk requirement, limiting exposure to any party to 15% of the assets. Tyr Capital has vehemently denied the allegations made by TGT.

The situation underscores the challenges faced by crypto investment firms in navigating the volatile landscape of digital assets and exchanges. The fallout from FTX’s collapse has sent shockwaves through the crypto industry, affecting companies directly or indirectly exposed to the beleaguered exchange.

As the legal battle unfolds, it raises broader questions about risk management practices within the crypto investment sector and the responsibilities of hedge funds in safeguarding client assets amid the unpredictable nature of the crypto market.

Digital Assets Desk

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