Breaking: Grayscale wins SEC lawsuit
The ruling from the judge does not ensure that a Grayscale Bitcoin ETF will be listed in the future.
The crypto investment manager Grayscale Bitcoin Trust (GBTC) has achieved a significant triumph over the U.S. Securities and Exchange Commission (SEC) in its attempts to transform its OTC GBTC request into a publicly traded Bitcoin ETF.
Based on the court documents filed on August 29, Judge Neomi Rao, who serves in the U.S. Court of Appeals Circuit, ruled in favor of Grayscale's request for a review and overturned the SEC's denial of the GBTC listing application. Earlier, Judge Rao expressed her dissatisfaction with the SEC's failure to provide a sufficient explanation for deeming Grayscale's actions as incorrect. Nevertheless, it should be noted that this ruling does not ensure that a Grayscale spot Bitcoin ETF will be listed in the future.
Michael Sonnenshein, the chief executive officer of Grayscale investments, mentioned on Twitter that their legal team is currently "actively examining" the court's viewpoint.
The D.C. Circuit court made a decision in support of @Grayscale in our legal case against the SEC's ruling to reject the conversion of $GBTC into an ETF!
We want to express our gratitude to all those who have been part of this amazing adventure, particularly our backers. Your support has meant a great deal to us and...
Grayscale's request to transform GBTC into a spot ETF was rejected by the SEC on June 29, 2022. Following this, Grayscale's senior legal strategist, Donald B. Verrilli Jr., who previously held the position of U.S. Solicitor General, lodged a petition for review with the United States Court of Appeals for the District of Columbia Circuit the following day. Grayscale CEO, Michael Sonnenshein, expressed the firm's profound disappointment and strong opposition to the SEC's denial of their application.
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Grayscale stands as the leading Bitcoin fund traded outside the stock exchange, managing a whopping $14 billion in assets. In the past, GBTC shares were sold at a significant markdown of approximately 50% in relation to the fund's total value. This occurred as a result of the company's legal battles against the SEC and concerns about the financial stability of its parent company, Digital Currency Group (DCG).
In October 2022, Grayscale ended significant contracts with its associate and digital currency mediator Genesis Global. On Nov. 16, 2022, Genesis Global suspended the process of taking out money, mentioning an unparalleled period of market disturbance due to the downfall of cryptocurrency exchange FTX. The company was also affected by the downfall of Singaporean crypto hedge fund Three Arrows Capital, which still owes Genesis a significant debt of $1.2 billion.
In January 2023, it was revealed that DCG is in debt to its creditors by more than $3 billion and is contemplating selling its portfolio of venture capital ventures for $500 million. On another note, Genesis Global has a hefty debt of $900 million owed solely to the users of Gemini's Earn program, a popular cryptocurrency exchange.
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