Crypto: Two giants do business in the face of gloom
The crash of the cryptocurrency market from its records has completely changed the situation in this young industry.
The cards are redistributed.
The evangelists’ faith has been shaken by enormous losses, thus forcing new alliances. It is in this context that Sam Bankman-Fried, considered the “white knight” of the crypto space, has just entered into an agreement with Anthony Scaramucci, the former communications director (briefly) of the White House under former President Donald Trump.
FTX Ventures, one of SBF’s companies to which Bankman-Fried is referred, will buy 30% of Skybridge Capital, the alternative investment company founded by Scaramucci, nicknamed Mooch. Financial terms of the transaction were not made public.
“FTX Ventures’ investment will provide SkyBridge with additional working capital to fund growth initiatives and new product launches,” the companies said in a press release. “Additionally, SkyBridge will use a portion of the proceeds to purchase $40 million in cryptocurrencies to hold the company’s balance sheet as a long-term investment.”
“Our business has continued to evolve since we founded the firm in 2005. We will remain a diversified asset management firm, while investing heavily in blockchain,” Scaramucci said.
“We look forward to working closely with SkyBridge on their crypto investment activity and also working together with them on promising non-crypto related investments,” SBF added.
Savior of struggling crypto firms
The news came as the cryptocurrency market has lost $2 trillion in valuation from its peak of $3 trillion in November, according to data from CoinGecko. Bitcoin (BTC), the leading cryptocurrency by market capitalization, is down 70% from its all-time high of $69,044.77 set on November 10.
Skybridge Capital, which started out as a traditional hedge fund before pivoting into cryptocurrencies with investments in bitcoin and other coins, is one of the firms that has been affected by the price drop.
Skybridge had bet that BTC will reach $100,000 per unit. But the fall in the price of the cryptocurrency has undermined those efforts, specifically leaving smaller funds like Legion Strategies vulnerable.
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The Legion Strategies fund, which claims to hold around $250 million with an 18% exposure to cryptocurrencies, suspended withdrawals from investors last July.
The exodus of investors also affected Skybridge Capital’s flagship fund, Skybridge Multi-Adviser Hedge Fund Portfolios, which had $2 billion under management at the end of March, as we wrote in July.
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Faced with the exodus of investors, Skybridge decided to raise new money.
“My sales team is out there collecting money. People also like pants,” Scaramucci said at the time. – We collect money.
He added that Skybridge doubled its stake in bitcoin: “The company is committed to its cryptocurrency (…) And yes, we’re betting in the back row 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 at the time.
The crypto crisis, on the other hand, has been a blessing for Sam Bankman-Fried. It has helped him improve his profile and strengthen his grip on the sector. In fact, the founder of trading platform FTX.com has emerged as the savior of most struggling businesses.
He provided credit facilities to lenders Voyager Digital and BlockFi and bought a significant 7.6% stake in Robinhood (HOOD) , the brokerage house for Gen Z and millennials. He has an option to buy BlockFi.
The agreement with Skybrdige Capital is therefore a continuation of a round of acquisitions that nevertheless worries some in the cryptosphere.
