Grayscale Reaches Settlement with Fir Tree Over Proposed Alterations to Bitcoin Trust, Lawsuit Resolved

Grayscale Investments and New York-based investment firm Fir Tree Capital Management have reached a resolution regarding their dispute over Grayscale’s Bitcoin Trust.

In an announcement on July 11, Fir Tree stated that Grayscale has agreed to provide additional documentation pertaining to its Bitcoin Trust (GBTC) in response to a lawsuit filed by Fir Tree in December 2022. The lawsuit aimed to halt Grayscale’s plans to convert its GBTC trust into a spot exchange-traded fund (ETF) and requested documentation regarding the company’s relationship with Digital Currency Group, Grayscale’s parent company.

Fir Tree alleged that approximately 850,000 retail investors had suffered due to what it described as Grayscale’s actions that were detrimental to shareholders. One of the concerns raised was the absence of a redemption program from GBTC into cash or cryptocurrency. Furthermore, Fir Tree’s legal team argued that Grayscale’s attempt to launch a spot crypto ETF could lead to prolonged legal battles, substantial legal expenses, significant management time, and strained relations with regulators.

Upon Grayscale’s provision of the agreed-upon GBTC documents, Fir Tree stated that it would further investigate Grayscale to determine its next steps. These steps may include pursuing additional litigation against Grayscale, Digital Currency Group (DCG), their directors, officers, advisors, or any other parties deemed responsible for the perceived loss of billions of dollars in GBTC’s market value.

Grayscale had previously filed a legal challenge against the United States Securities and Exchange Commission (SEC) in June 2022 after its application to convert the Bitcoin Trust into a spot Bitcoin ETF was denied by the regulatory authority. The lawsuit remains ongoing, with the SEC yet to approve any spot crypto investment vehicle, despite pending applications from firms such as BlackRock and other investment companies.

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