Anthony Scaramucci, the founder of SkyBridge Capital, argues that New York’s Martin Act, an anti-fraud law established in 1921, should be repealed.
This appeal for the law’s repeal follows the New York Attorney General’s $200 million settlement with Galaxy Digital, which is connected to the downfall of the LUNA token.
In a post on X, Scaramucci described the Martin Act as a “dangerously powerful” statute that could be misused, resulting in excessive legal actions. The Martin Act gives the NYAG the power to file lawsuits against those it believes have breached its provisions, but Scaramucci contends that the extensive authority granted to the AG for investigations and penalties poses a risk of misuse.
He criticizes the law for its lack of requirement to demonstrate intent, stating its “low standard of proof” is perilous. Scaramucci believes this law “shouldn’t exist,” asserting that the use of the Act to negotiate the $200 million settlement with Galaxy Digital is simply “lawfare.”
He further mentioned that the case and settlement stand in contradiction to actions taken by the U.S. Securities and Exchange Commission and the Department of Justice.
“This makes no sense and is completely at odds with the SEC and DOJ, who have been pursuing actions against Do Kwon and Terraform,” he stated. “It’s [lawfare] pure and simple due to an obscure but dangerously powerful New York law known as the Martin Act. The law has no need to prove intent, creating a low standard of proof that can lead to abuse like this. It shouldn’t exist.”
During its investigation, the NYAG accused Galaxy Digital of financial misconduct, asserting that the firm’s promotion of LUNA ended up harming retail investors. The collapse of the crypto project in May 2022 caused more than $40 billion in value to evaporate.
Scaramucci contends that Galaxy Digital and its CEO Michael Novogratz were misled by wrongdoers, specifically Terraform Labs and its founder, Do Kwon.
“Novogratz is a close friend and one of the most intelligent investors I know. Everything he ever communicated about Luna was based on his belief in the truth behind the deceptions carried out by the real culprits here, Do Kwon and Terraform Labs.”
Despite Scaramucci’s sentiments regarding the Martin Act, his comments about Novogratz have faced significant backlash on social media. Critics assert that Galaxy Digital “was paid” to promote LUNA and profited immensely, as alleged in the investigation.