Regulation News
- Recently, Grayscale entered into a legal battle with the U.S SEC following the rejection of its BTC ETF.
- The rejection saw Grayscale’s BTC Trust shares plummet by 35%.
- If Grayscale loses at the Appellate level, they still have two legal options left.
The largest crypto fund Grayscale, recently entered into a legal battle with the U.S. Securities and Exchange Commission (SEC). The reason for the legal battle is because the SEC rejected Grayscale’s spot margin bitcoin (BTC) exchange-traded fund (ETF). The SEC raised concerns over market manipulation, echoing its previous rejections.
As a result of the rejection from the SEC, shares of Grayscale’s Bitcoin Trust (GBTC) traded at a massive discount of around 35%, according to data released from YCharts.
The legal battle followed after the SEC denied Grayscale’s application to convert its current BTC trust to a spot ETF. On the same day, the company filed the lawsuit.
Grayscale’s CEO Michael Sonnenshein said in a recent interview:
We were simply asking the SEC to hold this product to a higher standard, to give it greater investor protection and give greater risk disclosure for investors.” He then added that “converting would unlock billions of dollars of unrealized shareholder value.
The lawsuit has now made its way to the Appellate court. If Grayscale loses at this level, then they have two options. The first option is to seek an “en banc” hearing. The second option is to appeal to the U.S. Supreme Court.
Contextually, Grayscale has removed 5 cryptos from its Digital Large Cap Fund in an attempt to readjust its portfolio in this bear market, according to a statement released earlier last week. The cryptos that were removed from the fund are Bitcoin Cash (BCH), Chainlink (LINK), Litecoin (LTC), Polkadot (DOT), and Uniswap (UNI).
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