Hedge Fund Sue Crypto Firm Grayscale For Mismanagement

Bloomberg reports the New York hedge fund Fir Tree is suing Grayscale Investments in the Delaware Court of Chancery. The reason is to get information about its flagship Grayscale Bitcoin Trust (GBTC) so that it can look into any possible conflicts of interest or mismanagement.

Fir Tree will use the information to encourage Grayscale to reduce fees and resume redemptions to address. The significant discount it trades at compared to the Bitcoin it owns. According to Fir Tree, approximately 850,000 Grayscale retail investors had been affected by shareholder-unfriendly measures.

“That strategy will likely cost years of litigation, millions of dollars in legal fees, countless hours of lost management time, and goodwill with regulators,” Fir Tree’s lawyers said in the complaint. “All the while, Grayscale will continue to collect fees from the trust’s dwindling assets.”

Grayscale To Resume Redemptions

The world’s largest publicly traded cryptocurrency trust, with $10.7 billion in assets, is owned by Fir Tree. Which wants Grayscale to resume redemptions and reduce costs.

It makes it possible for American investors to track Bitcoin price changes without actually buying the asset. In addition, the hedge fund wants to stop Grayscale from making GBTC into an exchange-traded fund (ETF).

Due to the rapid decrease in the price of Bitcoin and the failure of several well-known cryptocurrency companies. Including FTX, GBTC is currently trading at almost a record 43% below the cost of the trust’s underlying Bitcoin. It is why GBTC has lost nearly 75% of its value this year.

Using the data, it is gathering. Fir Tree wants to pressure Grayscale to begin activities that aren’t immediately visible to investors and lower fees from the current 2%.

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The only way for GBTC holders to liquidate their positions is to sell them to another market participant. Since the company does not offer a redemption scheme into fiat or cryptocurrency.

As a result of FTX’s failure and Genesis’ suspension of customer withdrawals last month. Grayscale Investments is a component of the Digital Currency Group (DCG), which has struggled.

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