As the chaos unleashed by the digital currency market crash continues, a fund run by former White House communications director Anthony Scaramucci has suspended investor redemptions.
According to a Bloomberg report, Legion Strategies, a fund under Scaramucci’s SkyBridge Capital umbrella, has decided to halt redemptions after a sharp decline in the value of stocks and digital currencies to which it is exposed. This is the latest in a long line of withdrawal suspensions in the industry.
More details on the suspension of Legion Strategies buyouts
According to Bloomberg, a source familiar with the matter said the decision to suspend redemptions was due to the plummeting value of private stocks in the fund’s portfolio. Stocks make up 20% of his holdings and include companies like Sam Bankman-Fried’s FTX.
When the news broke, longtime BTC critic Peter Schiff took to Twitter to say that he personally warned Scaramucci that his fund would serve as exit liquidity for some of the biggest whales in the world. digital monetary space.
I reported in real time and notified @Scaramucci myself that Skybridge Capital’s entry into #Bitcoins would mark the apogee of the #crypto market. In fact, many big players have been able to cash out thanks to all the money Skybridge has invested in crypto and crypto-related stocks.
— Peter Schiff (@PeterSchiff) July 19, 2022
At one point, 25% of Legion Strategies’ net assets were in digital currencies such as BTC, ETH, and ALGO. It is understood that the firm has reduced its exposure to digital currencies which now make up 10% of its holdings. The reduction comes amid a massive market meltdown, with BTC hovering around $20,000 after peaking above $65,000 in November 2021.
Overall, the digital currency market has lost $1.2 trillion in market capitalization since its 2021 peak, sparking a tsunami of liquidations, bankruptcies and withdrawal suspensions from some of the largest companies in the industry.
Opinion: Is SkyBridge Capital the next fund to explode?
Is SkyBridge Capital, or at least some of the funds under its umbrella, the next domino to fall? It’s not yet clear, but the suspension of investor redemptions is never a sign of a healthy, liquid fund with optimistic managers.
Legion Strategies’ move is just the latest in a long line of digital currency companies and funds aimed at hard-core investors. Recently, lenders Celsius Network and Voyager Digital suspended withdrawals and filed for Chapter 11 bankruptcy as Coinbase (NASDAQ: COIN) warned it could use customer assets as collateral in the event of bankruptcy.
While many retail speculators are praying for the crash to be over and a new bull market to begin soon, all signs point to a different reality. For example, alongside Legion Strategies’ decision to suspend takeovers, reports surfaced that Digital Currency Group owed $1.2 billion to bankrupt hedge fund Three Arrows Capital, signaling that the contagion is likely to continue.
For anyone with their eyes open and their chips on the table, it’s clear that the bottom is far from being reached. It remains to be seen whether Scaramucci’s fund will survive, but many more will go bankrupt and countless investors will find themselves empty-handed. a near certainty.
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