Tree Fund Sues Greyscale to Enforce Changes to Bitcoin Trust

Tree Fund Sues Greyscale to Enforce Changes to Bitcoin Trust

Fir Tree Capital Management has filed a lawsuit against Greyscale Investments, demanding that the company provide information that could be used to push it to make changes to how it manages its flagship Bitcoin Trust.

According to Bloomberg, a lawsuit was filed on Dec. 6 against Grayscale in Delaware Court of Chancery, demanding that Grayscale reduce its fees, begin redemptions, and turn over documents regarding its relationship with the Digital Currency Group.

The hedge fund also wants to end Grayscale Investments’ moves to convert its $10.7 billion Grayscale Bitcoin Trust (GBTC) into an Exchange Traded Fund (ETF).

In its complaint, the New York hedge fund said about 850,000 retail investors were “harmed by Grayscale’s unsupportive actions for shareholders.”

Shares of Grayscale Bitcoin Trust are currently trading at a nearly 43% discount to the net asset value (NAV) of its underlying digital asset, bitcoin, according to data published by Ycharts.

This is largely because GBTC holders have little or no way to exit their GBTC positions other than selling them to another market participant, as there is no fiat or crypto redemption program available.

Fir Tree claims that Grayscale’s takeover ban, which dates back to 2014, is “self-imposed”. The hedge fund says Grayscale is refusing to buy back shares because it would reduce its profits.

The company also wants Grayscale to stop trying to convert the trust into an ETF, which it has tried repeatedly for several years without success.

“This strategy will likely cost years of litigation, millions of dollars in legal fees, countless hours of lost management time, and goodwill with regulators,” Fir Tree lawyers said in the lawsuit. “During this time, Greyscale will continue to collect fees on the trust’s diminishing assets.”

However, Grayscale insists that the funds are being converted into an ETF that will allow it to create and redeem shares.

A spokesperson for Grayscale told Cointelegraph that it still has plans to convert GBTC into an ETF once US regulators give it the go-ahead.

“We remain 100% committed to converting GBTC into an ETF, as we strongly believe this is the best long-term product structure for GBTC and its shareholders. »

“At Greyscale, our mission is to help investors access the ever-changing crypto ecosystem through informed, secure and transparent investment vehicles. We value the views of our shareholders and appreciate contacting them directly regarding information regarding our product structure and operating model.”

Also read: Chief Legal Officer of Grayscale Says Bitcoin ETF Litigation Could Take Two Years

It should be noted that the spread between GBTC and bitcoin shares increased to almost 50% in the weeks following the collapse of the now bankrupt crypto exchange FTX.

GBTC shares have been steadily declining for almost a year since its peak of $51.47 per share on November 12, 2021, and the price per share was $8.76 at the time of writing, according to Yahoo Finance.

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