FTX investment in SkyBridge coincides with SALT NYC 2022

Last Friday, FTX Ventures acquired a 30% stake in SkyBridge Capital, Anthony Scaramucci’s $2.5 billion alternative asset manager. The partnership was announced on the eve of SALT New York, a leading finance, technology and macro forum for the world of alternative investments. Monday’s programming set the stage for SkyBridge’s vision of the future of a crypto-driven financial world. Touching on everything from the importance of FTX investing, the need for regulatory clarity and the strengths of each camp, the show reaffirmed the idea that TradFi and DeFi players will need each other so that digital assets (crypto) to flourish.

SkyBridge Capital and SALT

Starting his financial career at Goldman Sachs and Lehman Brothers, Scaramucci founded Oscar Capital Partners in 1996. After selling the firm to Neuberger Berman in 2001, he started SkyBridge Capital in January 2005. Like most funds, SkyBridge did not survive the crash. of the Global Financial Crisis, posting what would be its worst year ever, falling 19 percent in 2008. With the industry in turmoil, Scaramucci took a reverse “go big or go home” approach and launched the first conference SALT in Las Vegas in March 2009. As more of a public policy event, the show has featured heads of state, senior military leaders, renowned investors, athletes, actors and entrepreneurs who shape business and finance around the world.

If past years are any indication, Day 1 at SALT pointed to a global financial system that will rely heavily on crypto and its underlying distributed ledger technology. As the world’s imagination was captured by the meteoric rise of the asset class, the crypto winter of 2022 has given financial institutions the opportunity to further investigate the technology and their approaches to adapting it. As with any new technology and asset class, however, there are challenges. Lack of institutional operational knowledge and limitations of legacy technology platforms are only the tip of the iceberg. While financial technologists are creating solutions that alleviate these concerns, regulatory challenges complicate adoption as institutions grapple with issues not encountered with traditional financial assets and systems. Finally, the cultural differences between funders and “earners” create a less measurable layer of friction that has slowed the adoption of digital assets by enterprise users.

FTX investment

Sam Bankman-Fried (SBF) has been heralded as perhaps the most influential person in the world of crypto and Web3. His platform, FTX, has led the crypto dialogue around the world and pushed for common sense regulatory reforms that would provide clarity for investors and crypto firms. In addition to lobbying, the firm has aggressively invested in crypto

companies, even more so in the middle of the crypto winter. Both cautioned and reviled for bailing out crypto lenders like Voyager Digital and BlockFi, Bankman-Fried has acknowledged that investments can be very risky, but has stated that being a “good, constructive actor in this space ” justifies “burning a small amount of money.”

The SkyBridge-SBF connection was made when Scaramucci contacted Bankman-Fried while the former was on a Disney family cruise in the Bahamas. The pair struck up an unlikely alliance over lunch that then led to the inaugural Crypto Bahamas conference in April 2022, within seven months of FTX moving to the Caribbean island nation from Hong Kong.

FTX Ventures took a 30% stake in SkyBridge Capital with the right to acquire up to 85% of the firm. The funding package included $40 million for investment in a basket of various cryptocurrencies, which was immediately distributed. For FTX, the partnership opens up a network of global financial relationships at a time when TradFi institutions are planning their digital asset strategies. For SkyBridge, the relationship translates into an elevated view of the rapidly developing crypto ecosystem in which FTX plays a leading role.

While Scaramucci has been characterized in many ways, this latest move can be seen as anything but pragmatic. SkyBridge has weathered its share of market turmoil and grown at every turn. It is important to remember that less than a year after that inaugural SALT conference, SkyBridge acquired Citigroup’s
C
Fund of Funds business, increasing its assets under management to $5.6 billion from $1.4 billion. Acknowledging SkyBridge’s recent underperformance, Scaramucci pointed to changing markets (and their seemingly changing outlook on crypto) as the perfect opportunity to “build better [financial] technology for the future than we currently have.” Time will tell if he can sail the SS Mooch in calmer seas.

Leave a Comment