New York-based global investment management company SkyBridge Capital has temporarily suspended withdrawals from one of the firm’s funds with cryptocurrency exposure, Legion Strategies.
“Our board made the decision to temporarily suspend until we can raise capital inside the fund,” one of the firm’s founders and managing partner, Anthony Scaramucci, said in an interview with CNBC’s Squawk Box. “The fund is unlevered, so there’s definitely no fear of any liquidation whatsoever,” he assured investors.
“About 18% of the fund is in what we would call crypto exposure. An independent board also took part in the decision,” the executive disclosed.
The global investment management firm halted withdrawals for the fund as crypto prices continue to plummet, with Bitcoin trading down at around 67% from its all-time-high price and other smaller crypto assets following suit.
“We had to take into account a balance of different factors,” Scaramucci revealed. “We have some private investments there, and what you don’t want to do is to have to mix over the change due to near-term redemptions,” he added.
Legion Strategies is one of the smaller, offshore funds managed by SkyBridge with an approximately $250 million fund based in the Cayman Islands, according to Scaramucci. Ever since it was founded in 1994, this is the first time the fund has been suspended. FTX, the cryptocurrency exchange headed by billionaire Sam-Bankman-Fried, is also listed among its private investments.
Scaramucci was a former communications director of the Trump administration and his return to fund management was a big help to crypto but has hurt SkyBridge’s overall performance in 2022, given the current condition of the cryptocurrency market.
A regulatory filing revealed that Legion Strategies gained exposure to digital assets because of other funds handled by SkyBridge Capital. This includes Bitcoin, Algorand and Ethereum-centered vehicles, which got almost a quarter of the fund’s net assets as an investment.
“Everybody signed an investor agreement, this type of flexibility, so I don’t think there are any surprises here given what’s going on in the overall market,” Scaramucci said. The executive also revealed the Legion Strategies fund saw a 30% year-to-date nosedive but was up 5% in July.