A worldwide investigation is underway after the collapse of Mars FX, a hedge fund that once reported steady double-digit gains, with around $600m now unaccounted for, according to a report by Bloomberg citing court filings and unnamed people familiar with the matter.
The fund, which was operated by David Choi’s Novus Capital Partners, is now in bankruptcy after regulators, investors and law enforcement agencies in multiple jurisdictions opened inquiries into its activities. Investigations are reportedly underway in the US, UK and other regions, alongside civil lawsuits alleging fraud, forgery and money laundering.
Mars FX attracted more than 500 investors globally, including family offices, retirement accounts and professionals from the asset management industry, drawn by reported average annual returns of around 19% and an unusual record of no monthly losses.
However, those performance figures have since been called into question. Investors are now seeking answers over how funds were managed and whether reported profits were genuine, as liquidators attempt to trace assets across jurisdictions including the US, Cayman Islands, BVI and Hong Kong.
US authorities, including prosecutors in Manhattan and the FBI, have sought information on the fund’s operations, while regulators in the UK and other jurisdictions have also been notified. No formal charges have yet been filed, and none of the parties involved has admitted wrongdoing.
At the centre of the dispute is Novus Capital Partners, which told investors it relied on an external technology and trading partner to execute and consolidate trades. That partner, later identified in court filings as TRFX, has denied wrongdoing and disputed Novus’s account, claiming it had no valid agreement in place and that its platform had ceased operating in 2022.
The disagreement has become a key focus of legal proceedings, with conflicting claims over whether trading activity continued and whether reported gains were legitimate. Some court filings allege that performance figures shown to investors may have been partially or entirely fabricated.
The fund’s collapse has also drawn scrutiny of its auditing process. Deloitte, which provided audit opinions for Mars FX in previous years, is facing legal action from investors who argue that key fraud risks were missed. Deloitte has not publicly responded to the claims.
According to filings, Novus Capital and its principals received around $22m in fees prior to the fund’s collapse. The firm has said it is working to recover investor assets and is cooperating with authorities.
Some investors say they were initially reassured by the fund’s audited financials and consistent performance record, which appeared unusually stable in a sector known for volatility. Others have since described being misled by what they now believe were unrealistic returns.
With the fund in liquidation, court-appointed officials are attempting to reconstruct cash flows and determine what assets, if any, remain recoverable. However, they have warned that the lack of complete records makes it difficult to establish the true position.
