FTX’s Alameda Research dismisses lawsuit against Grayscale, ending dispute over fees and stake buybacks
Alameda Research, an affiliate of now-bankrupt cryptocurrency exchange FTX, has withdrawn its lawsuit against Grayscale Investments. The lawsuit, first filed in a Delaware court last March, accused Grayscale of engaging in practices that enriched the company at the expense of shareholders.
Alameda’s withdrawal strengthens Grayscale’s legal position.
Alameda Research, an affiliate of bankrupt cryptocurrency exchange FTX, has withdrawn its legal action against Grayscale Investments. The suit, filed in a Delaware court last March, accuses the digital asset manager of profiting at the expense of shareholders, according to court documents released Monday.
The lawsuit also alleged that Grayscale charged excessive fees and denied investors the opportunity to redeem shares in two cryptocurrency-based trusts: the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust.
The lawsuit also names Grayscale CEO Michael Sonnenshein, its parent company Digital Currency Group (DCG), and CEO Barry Silbert as defendants. After Alameda withdrew its lawsuit, Grayscale’s representative commented, emphasizing that the company had always considered the legal action unfounded. “Alameda’s voluntary dismissal underscores Grayscale’s position that this legal action is completely without merit,” the spokesperson said.
Earlier this month, Grayscale Bitcoin Trust (GBTC) began trading as an exchange-traded fund (ETF) on NYSE Arca after receiving approval from the U.S. Securities and Exchange Commission to convert the existing trust into an ETF.
Early trading data showed that the stock turnover was led by Grayscale Bitcoin Trust, recognized as the largest Bitcoin fund with a valuation of $28 billion. The fund’s trading volume exceeded $2 billion, indicating significant interest and activity from investors.
However, the SEC announced a delay in its decision on Grayscale Ethereum Trust’s application for a cash exchange-traded fund (ETF). The decision, originally scheduled for December 6, 2023, has been postponed to January 25, 2024, indicating the SEC’s opinion on whether Ethereum is a commodity or a security.
FTX is aiming for a multi-billion dollar recovery.
Sam Bankman-Fried’s trial is over, but FTX’s bankruptcy proceedings are actively developing. Under the leadership of John Ray III, the cryptocurrency exchange is rigorously working to recover billions of dollars for its creditors.
Last week, a federal appeals court ordered an independent bankruptcy investigator to be appointed to probe FTX’s collapse in November 2022. Overturning an earlier decision, the 3rd U.S. Circuit Court of Appeals in Philadelphia agreed with government regulators that the appointment of an examiner is mandatory under U.S. bankruptcy law, given the significant size of FTX’s case. This includes allegations that $10 billion worth of customer assets were misappropriated.
Interestingly, Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, dismissed FTX’s lawsuit seeking to recover fraudulently transferred funds. This follows their son’s conviction on fraud charges, with sentencing scheduled for March.