Swiss prosecutors raid Tyr Capital over allegations of mishandling FTX exposure – reports

Swiss authorities are investigating Tyr Capital, a crypto hedge fund, following accusations of disregarding risk warnings associated with the bankrupt FTX exchange before its November 2022 collapse, the Financial Times reported, citing legal documents filed in the Cayman Islands.

According to the report, the investigations emanated from complaints of “criminal” mismanagement lodged by TGT, one of Tyr’s clients, prompting a raid on Tyr’s offices by Swiss prosecutors. TGT seeks to close its account with Tyr and recoup assets, including a $22 million claim against the bankrupt crypto firm.

Tyr has refuted these allegations, asserting that it operated within legal bounds and did not mishandle its client funds.

Legal actions

Court documents reveal that TGT raised concerns about Tyr’s exposure to FTX days before the firm collapsed. However, the crypto hedge fund allegedly only attempted to withdraw funds on Nov. 11, coinciding with the day FTX filed for bankruptcy.

TGT escalated matters by filing a criminal complaint against Tyr in April 2023 with the Geneva prosecutor’s office, citing suspicions of misconduct and requesting a search of Tyr’s premises.

In addition, TGT accused Tyr of failing to adhere to its risk mitigation measures, citing a breach where more than 15% of its assets were held with a single counterparty.

TGT reportedly said, “There has been a serious and demonstrable lack of probity in the conduct of the fund’s affairs,” expressing a loss of trust and calling for an independent investigation into Tyr’s operations.

FTX bankruptcy update

FTX’s bankruptcy proceedings persist, with the failed firm management abandoning revival plans and opting to liquidate assets to refund customers based on the digital asset values at the time of the exchange collapse in 2022.

The move has drawn severe criticisms from several FTX creditors who are also pursuing legal action against the law firm Sullivan and Cromwell, LLP (S&C). The creditors alleged the law firm was complicit in the exchange’s downfall by supporting the crypto exchange in its deceptive practices.

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