Alameda Research drops suit against Grayscale as GBTC sees outflows

Alameda Research has dropped its lawsuit against Grayscale Investments. The suit was filed in March 2023 and sought injunctive relief against practices it claimed were suppressing the value of FTX Debtors’ assets.

Alameda Research’s suit sought a court order against the charging of management fees in violation of trust agreements. Those fees had amounted to over $1.3 billion at the time the suit was filed. In addition, the suit claimed Grayscale has a “self-imposed redemption ban” that discouraged 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.

Grayscale CEO Michael Sonnenshein said that 1.5% management fee charged for the Grayscale Bitcoin Trust is justified by “the size, the liquidity, and the track record” of the company https://t.co/l9cEzqr2F6

— Bloomberg Crypto (@crypto) January 20, 2024

Grayscale CEO Michael Sonnenshein was also named in the lawsuit, as was parent company Digital Currency Group (DCG) and its CEO, Barry Silbert. 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.”

GBTC was converted into a spot exchange-traded fund (ETF) after receiving approval from the United States Securities and Exchange Commission on Jan. 10. Its 1.5% management fee remains high compared to its competitors.

Related: Grayscale CEO’s warning: Only two or three spot Bitcoin ETFs are here to stay

GBTC has seen large outflows since its conversion to a spot ETF, leading to a drop in assets under management of almost $5 billion to $23.7 billion on Jan. 18 and bucking the upward trend of most other spot BTC ETFs.

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