Key Takeaways:
- SkyBridge Capital announced that it has temporarily suspended withdrawals from its Legion Strategies fund that had exposure to cryptocurrency assets.
- About 18% of the fund had crypto exposure.
- Scaramucci states the fund is unleveraged, so there’s no fear of liquidation.
The TerraUST/Luna implosion in May has destructed the crypto market like never before. The crash affected crypto lending platforms, hedge funds, institutional traders, and investment management firms alike.
Leading investment management company SkyBridge Capital’s Legion Strategies Fund is the latest in a growing list of crypto firms to freeze withdrawals owing to market conditions. On July 19, Anthony Scaramucci SkyBridge Capital announced that it has temporarily suspended withdrawals from its Legion Strategies fund that had exposure to cryptocurrency assets such as Bitcoin (BTC) and Ethereum (ETH).
Justifying the move, Scaramucci stated that the decision was owing to a precipitous fall in the prices of the stocks and cryptocurrencies owned by Legion Strategies. “Our board made a decision to temporarily suspend until we can raise capital inside the fund and then make sure when people get out they get out orderly”, he said.
The American financier went on to say “About 18% of the fund is in what we would call crypto exposure. So some of that is in Bitcoin and also private investments like in Sam Bankman-Fried company FTX.” He further reinstated that the fund is unleveraged, so there’s no fear of liquidation.
Scaramucci added, “Everyone signed in an investor agreement with this type of flexibility, so I don’t think there’s any surprise here with what’s going on in the overall market. But the good news is we’re catching a bounce now, and I think things are going to get better.”
The Legion Strategies fund is an offshore fund based in the Cayman Islands and is one of Skybridge’s smaller offerings, of which about 20% are private companies, with about $230 million in assets invested in hedge fund managers. The Skybridge website lists a dozen private stock investments, but it’s unclear whether all of these are included in the Legion Strategies fund. Among the twelve private companies, ten are crypto-related.
Scaramucci pointed out that around half of the $3.5 billion in assets under management at SkyBridge Capital is currently invested in cryptocurrencies such as BTC, the Algorand protocol, Ethereum, or related projects. Anthony Scaramucci, the former White House Director of Communications, further added the Legion Strategies fund was down 30% year-to-date but up 5% in July.
The last updated asset valuation figure of the fund was $421 million in April 2021. The US Securities and Exchange Commission has recently rejected Skybridge’s request to create a Bitcoin exchange-traded fund (ETF). Reportedly, the company is now gearing up to reapply for the position with SEC.
