Top Crypto Hedge Fund Faced Swiss Raid Over FTX-Linked Losses

Prominent crypto hedge fund Tyr Capital Partners faces allegations of “criminal” mismanagement and was raided by a Swiss prosecutor over losses incurred in relation to FTX.

The Geneva-based firm disregarded an internal risk threshold and investor alerts regarding its substantial exposure to the now-defunct exchange, the Financial Times reported Tuesday, citing legal documents an investor filed in the Cayman Islands.

The legal action originates from a fund named TGT, which partnered with Tyr. It is currently looking to liquidate its portfolio and assume control of the remaining assets. This includes a $22m claim against FTX. As per the FT report, TGT manages funds from various entities, including the crypto wealth platform Yield App.

Founded in 2018, Tyr is a Swiss hedge fund manager catering to high net-worth individuals. The firm specializes in diversified investment services, such as market-neutral/arbitrage and hybrid venture capital funds that integrate liquid assets for enhanced portfolio construction.

The firm is led by Edouard Hindi, formerly the head of energy proprietary trading at Deutsche Bank, and Olivier Trombert, formerly the head of Société Générale’s energy options desk.

TGT Accuses Crypto Hedge Fund of Breaching Risk Limits

Specifically, TGT alleged that Tyr disregarded an internal risk limitation restricting exposure to any single entity to 15% of their assets. However, Tyr disputed this claim, telling the prosecutor that an independent committee, established by the fund, found no violation of internal rules.

Lgal documents filed indicate that the claim against FTX was transferred to a new fund. Additionally, the FT said that a small portfolio containing TGT’s remaining assets experienced an 84% decline in value expressed in dollars between January and October last year.

Tyr reportedly denied the allegations brought by TGT. The fund didn’t return Cryptonews’ request for comment by press time.

Did Warnings Go Unheeded Before FTX Collapse?

According to the FT, TGT expressed concerns about the FTX’s financial stability to Hindi between Nov. 7 and Nov. 10, 2022. Notably, FTX filed for bankruptcy just one day later, on Nov. 11.

In April 2023, TGT reportedly filed a criminal complaint against Tyr with the Geneva prosecutor. The complaint alleged “criminal mismanagement” and sought a “dawn raid” on the fund manager’s offices.

A search warrant, executed on Aug. 17 last year, resulted in document seizure from Tyr.

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