The past few days have been eventful for Anthony Scaramucci, the former White House communications director under Donald Trump. He spent 11 days in the role.
“The Mooch,” as he is nicknamed, recently made the rounds of the media to try to reassure on the financial situation of Skybridge Capital, the fund he created and of which he is one of the managers.
Skybridge is one of the firms that bet that Bitcoin, the king of cryptocurrencies, would reach $100,000 per unit. But the fall in the price of Bitcoin, and digital currencies in general, since the beginning of the year has weakened the bet of Skybridge and more particularly of its smaller funds like Legion Strategies.
The Legion Strategies fund, which claims to contain about $250 million with an exposure of 18% to cryptocurrencies, recently announced the decision to suspend withdrawals from its investors.
“Alongside an independent board, SkyBridge temporarily suspended redemptions in its offshore fund, Legion Strategies, on Monday, July 18,” a source close to the matter recently told TheStreet.
The suspension is driven largely by a liquidity mismatch resulting from late-stage private investments in the fund, the person said. SkyBridge funds do not have leverage and there is zero risk of any asset liquidation, the person added. The suspension will be in place until SkyBridge can ensure the fund is not forced to exit positions to the detriment of investors who want to stay in.
Legion Strategies, which was created in 1994 and it’s based Cayman Islands, has approximately 24% of its net asset value in affiliated funds as of last February, including Bitcoin Fund, Ethereum Fund, SkyBridge Algorand Fund focused on the cryptocurrencies whose names they bear .
“This number may increase in the future, and the increase could be significant,” the fund said in a regulatory filing.
Scaramucci promised that Legion Strategies will lift the suspension of withdrawals as soon as the situation improves considerably in the market.
“As things start to get better, we’ll release that suspension,” he declared in an interview with CNBC. “The last point I’d like to make is that of course everybody signed into an investor agreement. This type of flexibility. So I don’t think there’s any surprises here given what’s going on in the overall market.”
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The company declined to comment.
It turns out that the exodus of investors also affects Skybridge Capital’s flagship fund, which is Skybridge Multi-Adviser Hedge Fund Portfolios, which had $2 billion under management at the end of March. According to the New York Times, investors in this flagship fund are looking to take out up to $890 million, roughly half of what the fund held at the end of March.
“We’re allowing people to take the exit,” Scaramucci told CNBC in another interview on July 21. “I’m confident Skybridge’s best days are still ahead.”
Skybridge used to allow customers to withdraw their money four times a year but after suffering significant losses in 2020 at the start of the covid-19 pandemic the firm reduced this to two windows per year. The first window is currently open, while the second window is in October. However, customers showing up during these two windows can only withdraw 16% of their funds, a limit set by Skybridge.
Scaramucci said that his firm had a “big position in bitcoin.”
“We bought Bitcoin at around $18,000 So they [prices] went to $69,000 traded back to $22,000.”
Faced with the exodus of investors, Skybridge is trying to raise fresh money.
“My sales team is out there raising money. People do like bottoms as well,” The Mooch said. “We are raising money.”
He added that Skybridge is doubled down on its bet on Bitcoin: “The firm is committed to its cryptocurrency (…) And yes, we’re making a back row bet that this is a big part of the future.”
More than 20% of the flagship fund is in cryptocurrency related investments, the Bitcoin evangelist said.