Grayscale Investments slammed with a lawsuit as GBTC plunges


TL;DR Breakdown

  • Grayscale charged to court by Fir Tree
  • GBTC plunged to 43% discount
  • Fir Tree says the action hurt investors

Grayscale has been sued by Fir Tree Capital Management, a firm based in New York. According to the filing, the plaintiff cited grounds bordering on mismanagement of funds and conflicts of interest. The filing details said that all these were tied to the recently launched Bitcoin Fund that was made available to the public. This news comes as the Bitcoin Trust is fighting bearish onset.

GBTC plunges to 43% discount

According to reports, the Grayscale Bitcoin Trust is presently witnessing a record low, going down to 43% of the normal Bitcoin value. Fir Capital said that the plunge resulted from the firm issuing a large number without providing an enabling environment for investors who want to leave their positions.

The document claimed that the issuance was carried out between 2018 and last year, and Grayscale only allowed investors to sell their shares to leave their positions. Fir Tree alleges that there are no legal implications behind stopping investors from exiting their positions and converting their balance to fiat anytime they wish. However, they must comply with the basic securities law in the country.

Fir Tree says the action hurt investors

In the complaint filed, Fir Tree alleged that Grayscale’s action had hurt the over 85,000 investors that the company has on its platform. The complaint will also stop Grayscale from exchanging GBTC into a spot ETF, which the firm was actively working on towards the end of last year. In the details, the legal representation of Fir Tree mentioned that this could mean a long hard battle in court and push Grayscale to the side of regulators. However, he also said that the firm would be taking out funds from the already depleted assets that the trust owns.

Grayscale has also stood its ground, mentioning that it will not go back on the plans. Meanwhile, companies still face unwavering blocks from the SEC in launching a Bitcoin ETF in the country. Over the last few months, the body had rejected or stalled the process of applications by companies across the country. After the previous rejection, Grayscale took the regulator to court in June. If the firm wins its case, it can convert its GBTC to a Bitcoin ETF without hindrance from the regulatory body.

Owotunse Adebayo

Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

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