Overview of the Suspension
Skybridge Capital’s decision to put a pause on withdrawals from its Legion Strategies fund has sent shockwaves through the crypto community. In a Tuesday interview with CNBC, founder Anthony Scaramucci confirmed the move, revealing that the board aimed to raise capital within the fund before allowing any exits.
What’s Behind the Suspension?
“Our board made the decision to temporarily suspend until we can raise capital inside the fund,” Scaramucci stated, assuring investors that the fund is unlevered, which means their money isn’t on the chopping block.
The Crypto Exposure
Approximately 18% of Legion Strategies is invested in various crypto assets. Among those mentioned were Bitcoin (BTC) and FTX stock, adding a tinge of intrigue to the fund’s financial strategy. The fund’s performance has been rocky, down 30% year-to-date, yet it managed to rebound by 5% this July.
Investor Implications
Despite the wobbly performance, Scaramucci reassured investors that they had agreed to this flexibility in their contracts. So, no surprises there. However, the suspension has left many pondering when exactly they will have access to their investments again.
The Fund’s History and Size
Founded in 1994, this is the first time the Legion Strategies fund has faced such a suspension. Operating out of the Cayman Islands, it currently holds around $250 million—making it one of the smaller funds under Skybridge’s umbrella. The firm itself sprouted in 2005 and has been a well-known player on Wall Street ever since.
Future Outlook for Skybridge and Crypto
As Skybridge dives deeper into the cryptocurrency waters, they’ve even made moves to launch a Bitcoin exchange-traded fund (ETF). However, they faced rejection by the SEC, adding to the challenges currently looming over the crypto market.
Words of Caution
“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 noted. He expressed concerns about the current political climate affecting crypto, emphasizing the need for foresight and strategy in these turbulent times.
