The Federal Reserve raised interest rates to combat rising inflation. This caused a crash in the stock and cryptocurrency markets. Many firms and companies have been affected by financial instability, with SkyBridge Capital the latest victim. This has caused it to stop withdrawing funds.
Many businesses, particularly those that deal in cryptocurrencies, have been affected by the current state of the financial markets. Voyager and Celsius, who are seeking to restructure their financial income to stay afloat, have filed Chapter 11 bankruptcy. Other crypto exchanges, such as CoinFLEX and capital funds, have also resulted in withdrawals being suspended.
SkyBridge decided to prohibit customers from withdrawing money from any of its funds. SkyBridge is following in the footsteps of Celsius, which suspended withdrawals to clean up its financial mess. The principal reason that withdrawals have been suspended is the long-term decline in cryptocurrency and stock market.
SkyBridge liquidation fears
SkyBridge Capital is one of Anthony Scaramucci’s funds established in the United States. Anthony Scaramucci was once the White House Communication Director in 2017, but his tenure lasted only 10 days before he was fired by Donald Trump.
When SkyBridge ventured into crypto, Peter Schiff, a well-known opponent of cryptocurrencies warned that “SkyBridge Capital’s foray into the bitcoin market will occur at its height.” Afterward, major players were allowed to sell their interests to SkyBridge for cash, and Legion Strategies is one of the funds that grabbed the opportunity.
However, one-fifth the Legion Strategies fund is made up of private companies and they are difficult to sell. But about a quarter of Legion Strategies’ net assets are already invested in additional funds containing cryptocurrencies and other digital assets that are managed by SkyBridge Capital.
SkyBridge Capital was also reported to have participated in an investment round by FTX. FTX is one of the most prominent cryptocurrency exchanges.
SkyBridge assured investors that they don’t need to worry about liquidation despite negative sentiments in cryptocurrency markets.