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Here’s Why Greyscale Filed Suit Against SEC

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Late on Wednesday night, Greyscale Investments filed a lawsuit against the SEC after that body denied its request to turn its prized Greyscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). According to the company, the change would end the GBTC price discount crisis.

The Greyscale lawsuit shouldn’t be a surprise because the company earlier openly gave revealed its intention to file a lawsuit if the SEC rejected the company’s application. The company announced its intention to respond by submitting an Administrative Procedures Act claim earlier this year. Don Virelli, a former US solicitor general, was hired to spearhead the initiative.

The lawsuit would accelerate the ongoing conflict between the firm’s management and SEC chairman Gary Gensler and, indirectly, the parent company and owner of CoinDesk, Digital Currency Group. Gensler has maintained an optimistic viewpoint on the worth, usefulness, and validity of the crypto ecosystem including bitcoin (BTC).

A press release from Greyscale’s CEO, Michael Sonnenshein, stated that the company and he are “deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the US market.” Sonnenshein also emphasized Greyscale’s commitment to the ETF conversion strategy.

The SEC’s position is that market manipulation of bitcoin prices is both widely possible and has already begun to be seen.

Position of Greyscale: By objecting to the conversion, the SEC is to blame for “locking up” investor funds from flowing to GBTC which resulted in hurting the investors of that company.

Due to GBTC’s private sales to approved investors, it was the only product of its kind on the market for the most of the fund’s life, and demand was way above outweighed supply. Private customers who bought GBTC at face value from Greyscale may expect that they would be able to resell them on the open market for premiums that were most of the times greater than 40%, even after keeping in mind the 6–12 month lockup period that restrict the selling of these types of shares. Obviously, this was a much better choice than redeeming them for their face value.

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