It continues: Now Alameda complains on behalf of the FTX believers Grayscale
If a steamer sinks, you shouldn’t go swimming nearby. License: public domain.
Because Grayscale’s Bitcoin and Etherfonds do not allow direct triggering of cryptocurrencies, FTX believers lose a quarter of a billion dollar- claims Alameda Research in court. The reasoning is plausible.
The sunken steamer pulls its circles. Alameda Research, as sister company from FTX deeply into the bankruptcy of the stock exchange, is now exhausting a lawsuit against Grayscale investments and its mother company Digital Currency Group.
In the name of FTX’s creditors, Alameda accuses the Digital Currency Group to have enriched themselves with their investment vehicles Grayscale at the expense of investors. Alameda holds 22 million shares of Grayscales Bitcoin-Trust and 6 million shares of the Ethereum Trust, what two or. three percent of the total funds. So there is a clear interest. But what specifically throws Alameda Grayscale?
Alameda’s fund shares were worth $ 290 million on the second market at the end of last week. However, according to the lawsuit, you could be worth twice as much if Grayscale would reduce the fees and allow investors to exchange shares for the equivalent of the underlying cryptocurrencies.
Grayscale is, you should know with its Bitcoin trust the biggest Bitcoin holder. Since 2013, the subsidiary of the influential Digital Currency Group ES Investors has allowed investors to build a Bitcoin position via his trust. Since Grayscale covers the shares of the fund 1-1 by Bitcoin, he now has a good 635.000 bitcoins accumulates – around 3 percent of all bitcoins. The position of the Ethereum Trust is similarly strong.
Grayscale’s trusts have a considerable catch: you cannot redeem the shares against cryptocurrencies or their equivalent, but only sell them on the second market. And there the price has been deviating significantly from the value of the bitcoins for a long time-now by 40-50 percent down. In addition, Grayscale has extracted more than $ 1.3 billion in the course of the past two years by fees.
Alameda’s lawsuit has a certain justification. “If Grayscale reduces the fees and stopped to unnecessarily prevent debits, the shares of FTX’s debtors would be worth at least $ 550 million, which is about 90 percent more that the value they have today.“FTX insolvency administrator John Ray commented,“ we use every possible means to maximize the compensation for ftx customers and creditors.“However, Alameda as a professional investor should have used all of this before the investment.
Grayscale calls the lawsuit of Alameda “misdirected”. The company has long been planning to transfer the Bitcoin trust to an ETF, but is prevented from the SEC stock market supervision and is therefore in a lawsuit against it. If it should be regulatory reasons why Grayscale cannot trigger the shares – it would be conceivable – this would be a striking example of how regulation damages consumers directly.
The Grayscale-Trust is something like the bright pink elephant in the room that everyone likes to talk about or reluctant to talk about. As the biggest Bitcoin Hodler, he is of course the goal of imagination and fears. It has been criticized for a long time that Grayscale does not allow the found audit of the found, but refers to Coinbase as a trustee, and, above all, that because of the lack of triggerability, the fund shares are only unreliable. The discount of 50 percent inhibits is sometimes rumored, the recovery of the Bitcoin Prize.
In the past few months there has also been a much more pressing concern that can take on the market for a very existential character. Because in the course of the FTX bankruptcy, the Lender Genesis also collapsed, which, like Grayscale, is a subsidiary of the Digital Currency Group. If Genesis’s bankruptcy also pulls the Digital Currency Group with it, and this in turn Grayscale – then the fund could be dissolved, which would be a potential horror scenario.
The head of the Digital Currency Group, Barry Silbert, has repeatedly emphasized that the companies are independent of each other and therefore there will be no rescue of Genesis by the group. But not everyone wants to accept this. Taylor Winklevoss from the Gemini stock exchange, whose customers have lost massive money through the Earn program of Genesis, requires Barry Silbert to jump for Genesis. After letting it pass an ultimatum, this matter should soon end up in court.
This is the Digital Currency Group or. Your subsidiary Grayscale is now in probably at least three processes: she herself complains against the SEC and is also accused by Alameda and probably also Gemini.
It is extremely unclear whether all of this will help investors receive their money back. However, it is clear that the lawyers and court will benefit considerably.
