A Los Angeles-area hedge fund operated by Korean American managers has filed for bankruptcy, raising growing concerns as roughly $600 million in investor funds remains unaccounted for.
Bloomberg reported that Mars FX recently entered bankruptcy proceedings and that investigators are still trying to determine where a significant portion of the money went.
Founded in 2020, Mars FX attracted more than 500 investors by promoting an average annual return of 19% and claiming it had never posted a monthly loss. The fund emphasized stable returns, drawing money not only from individual investors but also from family trusts, pension funds and private equity sources.
The investigation is now expanding quickly. The New York County District Attorney’s Office and the Federal Bureau of Investigation have launched probes into possible fraud. Lawsuits involving allegations of forged documents and money laundering are also underway in at least three countries.
Mars FX was managed through Novus Capital Partners, led by David Choi. According to reports, Choi and his brother, Jae Choi, each held a 25% stake in the firm, while the remaining ownership was divided between two other partners.
The fund had promoted a long-short strategy involving currencies and gold, claiming it could generate consistent returns with limited risk. But after the bankruptcy filing, a key question has emerged: whether those returns were actually generated through real trading activity.
Disputes over the flow of investor money are also intensifying. The funds are believed to have moved through the United States and Hong Kong before reaching TRFX, a technology company in the British Virgin Islands. However, TRFX has denied that the trades took place, complicating efforts to trace the missing funds.
Warning signs began to surface in November 2024, when investors’ redemption requests were rejected. As liquidity problems worsened and investors were unable to recover their money, the fund ultimately entered liquidation proceedings.
Questions are also being raised about the role of auditors. Deloitte issued clean audit opinions on the fund’s financial statements from 2020 to 2023, but investors have filed lawsuits alleging the firm failed to independently verify the fund’s assets.
Liquidation proceedings are now underway in the Cayman Islands and the British Virgin Islands. However, because records proving the movement of funds remain limited, it is still unclear how much money, if any, investors will be able to recover.
