Time to quit on clock

Anthony Scaramucci calls for Gary Gensler’s resignation from SEC

Digital asset advocate and former White House Director of Communications under President Donald Trump, Anthony “the mooch” Scaramucci, recently took to X (Twitter) to ask for the resignation of U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler.

The backdrop to Scaramucci’s request is the ramping up of enforcement actions by the SEC against illicit actors in the digital asset space and a recent loss the regulator suffered against Grayscale Investments in court.

On August 29, a three-judge panel of the District of Columbia Court of Appeals in Washington said the SEC was wrong to reject an application from Grayscale Investments to create a spot bitcoin exchange-traded fund (ETF).

The order stated that “the Commission failed to adequately explain” its reasoning for denying Grayscale’s ETF, so it must reconsider the application.

While it does not mean Grayscale’s ETF is automatically approved, many industry advocates were left crowing over the ruling, and the company’s CEO, Michael Sonnenshein, described the decision as a “historic milestone for American investors.”

Perhaps emboldened by the mood of optimism amongst the regulation-shy, or interference-shy, in the digital asset space, Scaramucci decided to add his voice to the chorus of those calling for change at the SEC and accusing it of stifling innovation.

This is not a surprising move for those following Scaramucci’s recent business dealings, but it raises the question of whether he’s a voice worth listening to.

The Scaramucci rollercoaster

An American financier by trade, Scaramucci began dipping into politics in a noticeable way in 2008, fundraising for Obama’s presidential campaign.

In 2012, he zagged to the right, serving as the national finance co-chair for Mitt Romney’s presidential campaign. Four years and another election later, he was a vocal supporter of Democrat Hillary Clinton’s 2016 campaign.

On January 12, 2017, Scaramucci was named Assistant to President Trump and director of the White House Office of Public Liaison and Intergovernmental Affairs.

A few days after his appointment, he told New York Magazines Jessica Pressler the “thing I have learned about these people in Washington is they have no money. So what happens when they have no fucking money is they fight about what seat they are in and what the title is. Fucking congressmen act like that. They are fucking jackasses”—fair to say he hasn’t always held public officials in high regard.

On July 21, the same year, President Trump appointed Scaramucci as the White House Communications Director. Six days later, he was dismissed.

Scaramucci was dropped from the post on the recommendation of newly appointed chief of staff John F. Kelly, who reportedly did not think “the mooch” was disciplined and believed he had lost his credibility. Scaramucci’s tenure was the shortest of a communications director in White House history.

Following this humbling experience, in a semi-swing back to the left, or at least further away from Trump, in June 2020, Scaramucci co-launched Right Side PAC, a super PAC aiming to prevent Trump’s re-election as president and supporting Democratic candidate Joe Biden.

This up-and-down, left and right political journey was mirrored by the fluctuating fortunes of his business career.

Scaramucci is a known digital asset advocate. In January 2022, SkyBridge Capital, the investment fund Scaramucci founded in 2005, was a backer in another super PAC called GMI, this time aiming to spend more than $20 million to support pro-digital asset congressional candidates ahead of the November elections. Another of GMI’s backers was Ryan Salame, the former co-chief executive of FTX Digital Markets.

This was not the mooch’s only interaction with the now notorious digital asset exchange FTX. In September 2022, a couple of months before it spiraled into bankruptcy amidst accusations of fraud, amongst other thing, FTX took a 30% stake in SkyBridge Capital.

Scaramucci was also reportedly “a mentor and business partner” to Sam Bankman-Fried, even coordinating the disgraced former FTX CEO’s fundraising trips in North America and the Middle East before the exchange collapsed.

In June 2023, Scaramucci admitted that “I got it wrong” when it came to his dealings with FTX and Bankman-Fried. Unfortunately, this realization didn’t come soon enough to prevent SkyBridge Capital from losing about 30% of its value from the beginning of 2020 through March 2023, 39% of which was in 2022 amidst the FTX fallout.

Scaramucci remains a very successful businessman, a graduate of the prestigious Harvard Law School, and a former Goldman Sachs employee. Still, his political track record and FTX associations throw doubt on the seriousness of him as a political actor—or at the very least raise questions about the weight his opinion should carry when calling for the resignation of the SEC’s chair, who himself is not a man to be underestimated.

The formidable operator at the SEC’s helm

Gary Gensler is an economic graduate, summa cum laude, from the Wharton School at the University of Pennsylvania, with some substantial career distinctions to his name.

While serving at the U.S. Treasury Department from 1997 to 2001, Gensler was awarded the agency’s highest honor for his service, the Alexander Hamilton Award.

In 2009, he was appointed the 11th Chairman of the Commodity Futures Exchange Commission (CFTC), leading the Obama Administration’s reform of the $400 trillion swaps market. In 2014, after leaving the agency, he won the Frankel Fiduciary Prize for his work to reform the financial regulatory system.

Post-CFTC, Gensler was a professor of Practice of Global Economics and Management at the MIT Sloan School of Management, until President Biden nominated him to serve as Chair of the SEC on February 3, 2021—he was confirmed by the Senate on April 14.

His reign as SEC chair has been somewhat controversial, primarily because of the so-called “regulation by enforcement” approach that he has championed to govern the digital asset industry in the U.S.

In 2022, the SEC administration under Gensler brought a total of 30 digital asset-related enforcement actions, up 50% from 2021. In 2022, monetary penalties against digital-asset market participants totaled approximately $2.61 billion.

Depending on your view, this is either excessive innovation stifling enforcement or an overdue clampdown on ‘crypto’ cowboys. Whatever your take, there’s no doubt Gary Gensler is a formidable financial markets operator with the kind of proven track record and CV you’d want for the head of one of the U.S.’s top financial regulators.

Whether Anthony “the mooch” Scaramucci has the credentials to call for his downfall is up to you to decide.

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