A new court filing indicates that Alameda Research, a sister firm of FTX, has withdrawn its lawsuit against Grayscale Investments in relation to the transformation of its primary trust product into an exchange-traded fund (ETF). The lawsuit, which was initiated in March 2023, sought injunctive relief against alleged practices that inflated the worth of the assets owned by FTX debtors.
The lawsuit asserts that in the aftermath of FTX’s failure, Grayscale’s Bitcoin Trust (GBTC) ensnared investor funds in excess of $9 billion. The grievance was lodged as an element of broader initiatives to recover and “maximize” recoveries for FTX clients whose funds were either lost or frozen on the platforms of the defunct cryptocurrency exchange and its affiliates. Additionally, the suit claimed Grayscale charged exorbitantly high fees. The filing on Monday failed to offer an explanation regarding Alameda’s decision to dismiss the lawsuit.
GBTC commenced trading as an exchange-traded fund (ETF) on the New York Stock Exchange earlier this month. Previously, it functioned as a closed-end fund, thereby imposing challenges on clients seeking to pay out or redeem their funds. However, ever since its transformation into a Bitcoin spot ETF, investors have been promptly redeeming their holdings. The redemption of billions of dollars last week precipitated a precipitous decline in the value of Bitcoin (BTC).
A representative of Grayscale, who verified the news, further stated that Alameda’s withdrawal supports the asset manager’s position on the motion. Sonnenshein’s firm had previously contended that the cryptocurrency trading firm affiliated with FTX lacked any valid legal basis to initiate a lawsuit.
