FTX debtors file a lawsuit against Grayscale demanding $9 billion worth of shares unlocked
|- FTX's current CEO, John Ray, said the self-imposed improper redemption ban had been an issue.
- According to the filing, Grayscale has extracted over $1.3 billion in management fees since 2021.
- Grayscale is already fighting a lawsuit with the SEC over its attempts at becoming an ETF.
Grayscale has become the new target of 2023 as the company has been taking hits from all directions. Not only is it about to begin its war of words with the Securities and Exchange Commission (SEC), but it is also taking heat from the biggest collapse of 2022, FTX.
FTX vs. Grayscale
As per a filing dated March 6, FTX and its debtors have announced a lawsuit against Grayscale Investments. The asset management company has been targeted by the John Ray-led firm as Grayscale failed to recover the cost of the injunctive relief.
Through the lawsuit, FTX debtors are seeking injunctive relief to unlock about $9 billion worth of Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE). This will enable FTX to realize more than $250 million in asset value.
According to the filing, in just the last two years, Grayscale has managed to extract over $1.3 billion in management fees, violating the Trust agreements. At the same time, the asset management company's actions have been blamed for the 50% decline in Net Asset Value.
Commenting on the lawsuit, the current Chief Executive Officer (CEO), John Ray, said,
"Our goal is to unlock value that we believe is currently being suppressed by Grayscale's self-dealing and improper redemption ban. FTX customers and creditors will benefit from additional recoveries, along with other Grayscale Trust investors that are being harmed by Grayscale's actions."
Grayscale vs. SEC
While on the one hand, Grayscale is at war with FTX, on the other, it is also dealing with the Securities and Exchange Commission (SEC). The company filed a lawsuit against the regulatory body for consistently denying a spot in Bitcoin ETF.
Grayscale called the outlook shared by the SEC as unfair and that it showcased harsh treatment. The SEC countered the allegations saying that spot ETFs lack oversight at the moment and would need to be monitored akin to the Bitcoin Futures ETFs, which are monitored by the Chicago Mercantile Exchange.
The case will next go to oral arguments, where both parties will present what they have to say in regard to the spot Bitcoin ETF.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.