Grayscale Crypto Firm in Hot Water Again as New GBTC Lawsuit Filed by Osprey – Here's What You Need to Know

Source: Yanik Chauvin/Adobe

Grayscale, the digital asset management firm that is part of Barry Silbert’s crypto conglomerate Digital Currency Group (DCG), is in hot water after being sued by industry rival Osprey Funds over how it promotes the Grayscale Bitcoin Trust (GBTC) fund.

In the lawsuit, filed on January 30 with the Fairfield Judicial District Superior Court in Connecticut, Osprey accused Grayscale of engaging in “unfair and deceptive acts and unfair competition” with its GBTC fund.

GBTC is an investment product individual investors can buy with their brokerage accounts. The product has served as a substitute for a spot bitcoin ETF in the US, where no such ETF has been approved yet by the Securities and Exchange Commission (SEC).

Screenshot from lawsuit filed with the Fairfield Judicial District Superior Court. Source: civilinquiry.jud.ct.gov

Grayscale has publicly said that it intends to convert GBTC to a bitcoin-backed exchange-traded fund (ETF) once it receives the greenlight from regulators. It’s this claim that is now at the center of the lawsuit.

Osprey: Grayscale promoted ETF conversion as “forgone conclusion”

According to Osprey, which sponsors the competing Osprey Bitcoin Trust (OBTC), Grayscale has advertised GBTC as if a future conversion to an ETF is a “foregone conclusion.” This, however, is far from the truth, Osprey claimed.

The conversion of the GBTC Bitcoin Trust to an ETF was “never likely to happen,” Osprey’s lawyers wrote in the lawsuit, while adding:

“Grayscale knew that this message was false.”

Despite this, Grayscale ran “campaign after campaign” where it pushed the message that a conversion of GBTC to an ETF was “inevitable,” Osprey wrote.

False advertising reason for dominant position

Osprey further claimed in the lawsuit that the “false and misleading advertising” that Grayscale has been engaged in is the main reason the firm has managed to achieve such a dominant position in the market.

The firm said in that Grayscale has a market share of approximately 99.5%, despite it charging “more than four times the asset management fee that Osprey charges for its services.”

GBTC’s annual fee is 2%, while OBTC charges 0.49% annually, according to the two companies’ websites.

Comments

Post a Comment

Popular posts from this blog

Xbox crypto wallet rumors raise hopes: How other tech giants navigate cryptocurrency

Uncover how major tech companies are exploring the cryptocurrency frontier. From patents to partnerships, delve into the unique approaches and initiatives leading the tech-crypto integration narrative. In a significant trend, major tech companies are increasingly getting involved in the world of cryptocurrencies. This growing connection suggests a future where digital currencies could play a pivotal role in our tech interactions. Amid this, the recent revelation about Microsoft’s plans to integrate a crypto wallet into its Xbox platform adds a new layer to this narrative, offering a glimpse into how tech giants might be leaning towards embracing cryptocurrency . Now, let’s explore how other major tech players are venturing into the crypto realm to better understand the overall landscape. Microsoft: a glimpse into the future The leaked documents concerning Microsoft’s ambitious plan to meld Bitcoin wallet s with its popular Xbox gaming platform have sparked exc...
Read more

Racy Beeple SBF artwork becomes his first to enter museum permanent collection

Image
The Castello di Rivoli Museo d’Artte Contemporanea in Italy has made a significant addition to its permanent collection , marking a milestone in the world of digital art. The museum has acquired its first non-fungible token (NFT) artwork , a provocative piece created and donated by the renowned digital artist Beeple. The artwork, named “FTX Board Meeting, Day #5676 11.13.2022 (2023),” is a unique blend of digital and traditional art forms. It exists both as a one-of-a-kind NFT and an oil painting. The piece, rendered in Beeple’s distinctive hyperreal style, imagines a day in the server room of the now-defunct crypto exchange, FTX. Carolyn Christov-Bakargiev, the museum director, expressed her appreciation for Beeple’s work, stating it represents a significant contribution that brings a 21st-century medium into the museum’s collection. The artwork, she noted, combines the digital and physical realms in a compelling way. The piece is not withou...
Read more

Marathon Digital Holdings enhances Bitcoin mining operations

Marathon Digital Holdings reported a production of 1,202 Bitcoins in October, selling 961 to cover costs, with a remaining holding of 13,396 unrestricted BTC as of month-end. Marathon Digital Holdings, Inc., a major player in the Bitcoin mining sector, has shared a snapshot of its performance and ongoing developments for October 2023. In the latest update, the company detailed a slight increase in its energized hash rate, signaling continued growth in its mining capabilities. Fred Thiel, Marathon’s Chairman and CEO, noted a 1% rise in the energized hash rate, now reaching 19.2 exahashes. This advancement is particularly attributed to the progress in the company’s Garden City, Texas facility, which contributed 4.1 exahashes. As this site approaches full operational capacity, Marathon is set to exceed its target of 23 exahashes, aiming to become the largest Bitcoin miner in North America. Marathon’s presence is not just growing in the U.S.; its international ventur...
Read more