Swiss Prosecutor Raids Tyr Capital Over Alleged Mismanagement Following FTX Losses

Tyr Capital Partners, a prominent crypto hedge fund based in Geneva, Switzerland, is under scrutiny for alleged “criminal” mismanagement after suffering losses related to the collapse of the FTX exchange. Swiss prosecutors have raided the firm’s offices in response to these allegations.

According to reports from the Financial Times citing legal documents filed in the Cayman Islands by an investor, Tyr Capital Partners ignored internal risk limits and investor alerts regarding its significant exposure to FTX before its demise.

The legal action was brought by a fund named TGT, which partnered with Tyr Capital Partners and is now seeking to liquidate its portfolio and take control of remaining assets, including a $22 million claim against FTX.

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Tyr Capital’s Denial and Response to Allegations

Tyr Capital Partners, founded in 2018, caters to high-net-worth individuals and specializes in diversified investment services, including market-neutral/arbitrage and hybrid venture capital funds.

TGT alleges that Tyr Capital Partners breached internal risk limitations by exceeding exposure limits to any entity, such as FTX. However, Tyr disputes these claims, stating that an independent committee found no violation of internal rules.

Legal documents indicate that the claim against FTX has been transferred to a new fund. Additionally, TGT’s remaining assets experienced a significant decline in value, with a portfolio witnessing an 84% drop in value expressed in dollars between January and October last year.

Concerns over FTX’s Stability and Legal Proceedings

Concerns about FTX’s financial stability were reportedly raised to Tyr Capital Partners’ leadership before the exchange’s collapse. TGT expressed these concerns between November 7 and November 10, 2022, just one day before FTX filed for bankruptcy.

In April 2023, TGT filed a criminal complaint against Tyr Capital Partners with the Geneva prosecutor, alleging “criminal mismanagement” and prompting a “dawn raid” on the fund manager’s offices. A search warrant executed on August 17 last year resulted in the seizure of documents from Tyr Capital Partners.

TGT director Justin Wright informed the Financial Times that the fund is currently undergoing a legal wind-up process through the courts of the Cayman Islands.

Read Also: FTX Abandons Exchange Revival Plan, Vows Full Repayment to Customers