Scaramucci advocates abolition of New York's 'potentially hazardous' Martin Act

Anthony Scaramucci, the founder of SkyBridge Capital, has called for the repeal of New York's Martin Act, an anti-fraud law that was enacted in 1921.

Scaramucci's appeal for the abolition of the law comes after the New York Attorney General's $200 million settlement with Galaxy Digital, which is connected to the failed LUNA (LUNA) token.

In a post on X, Scaramucci described the Martin Act as a "dangerously powerful" law that is prone to abuse and legal overreach. The Martin Act grants the NYAG the authority to bring lawsuits against parties believed to have violated its provisions, but Scaramucci argues that the broad authority given to the AG in terms of investigation and penalties can be misused.

Without the need to demonstrate intent, the Act is insufficient, according to the SkyBridge Capital founder. He claims that the "low standard of proof" required by the Act is dangerous. Scaramucci believes that the law "shouldn't exist" and that the NYAG's use of the Act to reach a $200 million settlement with Galaxy Digital is "lawfare pure and simple."

He also mentioned that the case and the settlement contradict actions taken by the United States Securities and Exchange Commission and the Department of Justice.

"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 wrote. "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.”

The NYAG accused Galaxy Digital of financial misconduct during its investigation, claiming that the company's marketing of LUNA ultimately harmed retail consumers. More than $40 billion in value vanished when the cryptocurrency project failed in May 2022.

Scaramucci claims that Galaxy Digital and its CEO Michael Novogratz were duped by malicious 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 Scaramucci's criticism of the Martin Act, his comments about Novogratz have sparked controversy on social media. Many people claim that Galaxy Digital "was paid" to promote LUNA and that it made significant profits as a result, as claimed in the investigation.