Trump administration Communications Director Anthony Scaramucci has been having an eventful few days. The investment vehicles he founded made big bets on on crypto-currency and he has been busily reassuring investors they have nothing to worry about, even as his funds have limited and suspended withdrawals.

The investment fund he created, Skybridge Capital, is one of many firms that bet Bitcoin was heading to $100,000 per coin. Since the token has collapsed, it weakened Skybridge’s position, and even more, the positions of its smaller funds like Legion Strategies.

The Legion Strategies fund, with about an 18% exposure to cryptocurrencies among its $250 million under management, has just suspended withdrawals from its investors.

A source close to the matter told TheStreet, “Alongside an independent board, SkyBridge temporarily suspended redemptions in its offshore fund, Legion Strategies, on Monday, July 18.” 

The suspension was precipitated by a liquidity mismatch produced by late-stage private investments into the fund. The source added that Skybridge funds do not have leverage, and there is no risk of any asset liquidation. The suspension will be maintained, until Skybridge can ensure it will not be forced to exit positions to the detriment of investors who wish to remain in it.

As of February, Legion Strategies had approximately 24% of its funds in affiliated funds, including Bitcoin Fund, Ethereum Fund, and the SkyBridge Algorand Fund. At the time the fund noted in an SEC filing, “This number may increase in the future, and the increase could be significant.”

Scaramucci has been promising that Legion will lift the suspension of withdrawals as soon as market conditions improve “considerably,” according to one report

In an interview with CNBC, Scaramucci said, “As things start to get better, we’ll release that suspension. 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.”

As for Skybridge Capital’s flagship fund, which is Skybridge Multi-Adviser Hedge Fund Portfolios, which held $2 billion under management as of the end of March, investors there are looking for the exits. The New York Times reported that investors have been looking to pull up to $890 million out recently.

Scaramucci said, “We’re allowing people to take the exit. I’m confident Skybridge’s best days are still ahead.”

Skybridge had allow investors to withdraw funds four times per year, however since it began suffering significant losses at the start of the Covid-19 pandemic, it has reduced that to two withdrawal windows per year. The first window is presently open, and the second will open in October. However customers choosing to withdraw funds during these windows are only allowed to withdraw 16% of their funds.

Scaramucci had previously noted Skybridge had a “big position in bitcoin.”

Faced with all the investors fleeing, Skybridge is scrambling for new investors.

Scarmucci said, “My sales team is out there raising money. People do like bottoms as well. We are raising money.”

However given they may not be able to access any funds they give to the firm, you do have to wonder how many investors out there who like bottoms are investing with Skybridge.

Photo of Anthony Scaramucci courtesy of Wikipedia