Alameda Research Drops Suit Against Grayscale as GBTC Sees Outflows

Alameda Research Drops Suit Against Grayscale as GBTC Sees Outflows – Alameda Research has withdrawn its legal action against Grayscale Investments, a lawsuit initiated in March 2023. The lawsuit aimed to secure injunctive relief, alleging that certain practices by Grayscale Investments were dampening the value of assets belonging to FTX debtors.

The lawsuit brought by Alameda Research aimed to obtain a court order against the imposition of management fees, which were alleged to be in violation of trust agreements. These fees had reached a total of over $1.3 billion at the time the lawsuit was initiated. 

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Furthermore, the legal action asserted that Grayscale had implemented a “self-imposed redemption ban” designed to dissuade shareholders from redeeming shares in the Grayscale Bitcoin (GBTC) and Ethereum Trusts. “If Grayscale reduced its fees and stopped improperly preventing redemptions, the FTX Debtors’ shares would be worth at least $550 million.” 

“Approximately 90% more than the current value of the FTX Debtors’ shares today,” FTX said in a statement at the time of filing. The lawsuit implicated Grayscale CEO Michael Sonnenshein, along with the parent company Digital Currency Group (DCG) and its CEO, Barry Silbert. Barry Silbert resigned from the Grayscale board in December.

A Grayscale spokesperson told Cointelegraph in a written statement on Jan. 22: “We are pleased to confirm that Alameda Research, FTX’s affiliated hedge fund, has voluntarily dismissed its lawsuit against Grayscale. Alameda’s voluntary dismissal underscores Grayscale’s position that this legal action was entirely without merit.”

Following approval from the United States Securities and Exchange Commission on January 10, GBTC underwent a conversion into a spot exchange-traded fund (ETF). Despite this transformation, its management fee of 1.5% still stands comparatively high when compared to its rivals.

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Since its transition into a spot ETF, GBTC has experienced substantial outflows, resulting in a decline in assets under management by nearly $5 billion to $23.7 billion as of January 18. This contrasts with the upward trajectory observed in most other spot Bitcoin ETFs.

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