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Anthony Scaramucci, founder of SkyBridge Capital, says New York’s Martin Act, an anti-fraud statute enacted in 1921, should be repealed.
The SkyBridge Capital founder’s call for the abolishing of the law comes in the wake of the New York Attorney General’s $200 million settlement settlement with Galaxy Digital. And it all relates to the collapsed LUNA (LUNA) token.
In a post on X, Scaramucci, labelled the Martin Act as a “dangerously powerful” law whose application is likely to be abused and lead to legal overreach. The Martin Act allows the NYAG to bring lawsuits against parties deemed to have violated its stipulations, but according to Scaramucci, the sweeping authority allowed the AG in terms of investigation and penalties can be abused.
With no need to prove intent, the Act comes short. It’s “low standard of proof” is what the SkyBridge Capital founder says is dangerous. To him, this law “shouldn’t exist,” and NYAG’s use of the Act to reach the $200 million settlement with Galaxy Digital is “lawfare pure and simple.”
He added that the case and the settlement is at odds with actions taken by the United States Securities and Exchange Commission and the Department of Justice.
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“This makes no sense and is completely at odds with the SEC and DOJ which have been pursuing actions against Do Kwon and Terraform,” he posted. “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 open the door for abuse like this. It shouldn’t exist.”
In its investigation, the NYAG alleged financial misconduct on the part of Galaxy Digital, claiming the firm’s marketing of LUNA eventually harmed retail. The crypto project’s collapse in May 2022 saw more than $40 billion in value vanish into thin air.
Scaramucci says Galaxy Digital and its chief executive Michael Novogratz were deceived by bad actors – Terraform Labs and its founder Do Kwon.
“Novogratz is a dear friend and one of the smartest investors I know. Everything he ever said about Luna was because he thought it was true based on the deception perpetrated by the real bad actors here, Do Kwon and Terraform Labs.”
Despite the sentiment on the Martin Act, Scaramucci’s remarks on Novogratz have largely been criticized on social media. Many say Galaxy Digital “was paid” to pump LUNA and it reaped huge profits as alleged in the investigation.
Read more: Terraform Labs is launching the claims portal to begin reimbursing creditors
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