Aaryamann Shrivastava
FXStreet
- Hedge fund Fir Tree sued the investment firm to acquire information about the Grayscale Bitcoin Trust.
- Earlier last month, the Grayscale Bitcoin Trust's discount reached its widest gap of 42% from its net asset value.
- Grayscale is also fighting the Securities and Exchange Commission over the rejection of the application to convert GBTC into an ETF.
Grayscale Investment has a huge name in the crypto space primarily for being the premier Bitcoin fund. However, the situation for the investment firm is slowly turning unfavorable as it continues to take punch after another from all sides. This has led to a further decline in its market value as well as the Grayscale Bitcoin Trust (GBTC).
Grayscale could have conducted mismanagement
Grayscale found itself on the receiving end of a lawsuit on Wednesday. A New York-based hedge fund Fir Tree Capital Management, filed the suit to initiate an investigation into Grayscale Investments. Through the lawsuit, Fir Tree intends to obtain information to investigate potential mismanagement and conflict of interest at the hands of the defendant.
The complaint, as reported by Bloomberg, pertains to books and records action. Through it, Fir Tree is demanding the documents that could be used in court against Grayscale to close the 42% discount to the fund’s Net Asset Value (NAV).
Grayscale Bitcoin Trust discount to NAV
Fir Tree also went on to raise fingers at Grayscale's parent company, Digital Currency Group. According to the hedge fund, Digital Currency Group might be interdependent with its other businesses - Grayscale and Genesis Global Trading.
In the month of November, Genesis Global Trading also faced a potential downfall when it halted withdrawals. The probability of a bankruptcy filing also arose due to the FTX-induced liquidity crunch.
Grayscale vs. SEC
While on the one hand, Grayscale is taking a hit in the courtroom, on the other, it sent out a hit on the Securities and Exchange Commission (SEC). The regulatory authority fell into the crosshair of Grayscale Investments due to its repeated rejection of the investment firm's request to convert GBTC into an ETF.
Consequently, Grayscale initiated a lawsuit against the SEC and filed its opening brief on October 12, claiming SEC had been treating spot Bitcoin ETFs with "special harshness". While a resolution is months away, Grayscale has managed to initiate a dialogue about the same.
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