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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.

Author

Aaryamann Shrivastava

Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.

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