Grayscale Sued by Alameda and FTX
• Grayscale, the world’s largest Bitcoin fund, is being sued by Alameda and FTX on behalf of their debtors and affiliates.
• The complaint seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts”.
• Grayscale is also locked in a legal dispute with the U.S. Securities and Exchange Commission over their reluctance to allow it to convert its fund into a Bitcoin Spot ETF.
Grayscale is owned by Digital Currency Group (DCG) and is managed by CEO Michael Sonnenshein. It offers a fund designed to provide Bitcoin exposure to those who would otherwise be unable to hold units of the actual cryptocurrency. However, because the fund’s shares are not easily redeemable for their underlying Bitcoin, the shares frequently trade well above or below the value of the company’s BTC. Alameda has 22 million shares of Grayscale’s Bitcoin Trust and 6 million shares of its Ether Trust.
According to a press release issued by FTX Debtors on Monday, claims have also been filed directly against Grayscale CEO Michael Sonnenshein and DCG CEO Barry Silbert. The complaint seeks to „unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts,“ according to a statement from Alameda. Furthermore, it allegedly made up explanations to keep stockholders from redeeming their shares, resulting in a „self-imposed redemption ban,“ according to the statement – which could recoup almost $250 million in value for FTX clients who have been left high and dry since November when withdrawals were banned on exchange.
Grayscale is now locked in a legal dispute with the U.S Securities and Exchange Commission over their reluctance to allow it to convert its fund into a Bitcoin Spot ETF – which would make shares easily redeemable overnight erasing GBTC share discounts at once. The District Court of Columbia will hear oral arguments on this matter on March 7th 2021.
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