SEC Settles with Cryptocurrency Firm Over Custody Rules

The U.S. Securities and Exchange Commission (SEC) has reached a settlement with Galois Capital Management, a cryptocurrency-focused investment advisory firm based in Florida.

The settlement addresses allegations that Galois Capital violated custody regulations by using Fireblocks, which the SEC considers an inadequate custodian, and for having a potentially deceptive redemption policy.

As part of the agreement, Galois Capital will pay a $255,000 fine but will not admit to or deny the SEC’s claims. The company expressed its satisfaction with resolving the matter and moving forward.

Bill Hughes, an attorney at ConsenSys, pointed out on social media that the penalty is relatively minor compared to the costs of a full SEC investigation.

Despite the settlement, Galois Capital defended its decision to use Fireblocks, arguing that it was the most secure option available for safeguarding its clients’ cryptocurrency assets at the time.

Crypto analyst Adam Cochran found the SEC’s actions surprising, particularly in light of the agency’s past criticism for not preventing the collapse of FTX, which remains one of the most significant financial scandals in history.