Alleged Mismanagement of Bitcoin Investment, Grayscale Sued by Client
A hedge fund company from New York has sued Grayscale, allegedly due to mismanagement of Bitcoin investment product, GBTC (Grayscale Bitcoin Trust).
The claimant is a client of Grayscale, namely Fir Tree Capital Management, which has filed a lawsuit for potential mismanagement and conflict of interest.
Bloomberg reported that, in order to prove the veracity of the allegations in the lawsuit, Fir Tree asked for details regarding the investment firm’s GBTC products.
For your information, GBTC has a value of US $ 10.7 billion, being the world’s largest publicly traded crypto fund.
Grayscale Mismanaged Bitcoin (BTC) Investments?
According to a Coindesk report, the value of GBTC has fallen sharply, approaching a record 43 percent of the price of the underlying BTC in the product.
In addition, GBTC has also slumped more than 70 percent so far this year due to the slump in the crypto market in the crypto winter, as well as the fallout from the FTX scandal.
It was discovered that the Fir Tree wanted to use the information they were trying to get to pressure Grayscale into proceeding with the redemption.
Grayscale redemption has been unavailable to its clients for a while, so this indicates that something is wrong with the management of the Bitcoin (BTC) investment product.
Decrypt reported, Fir Tree also disclosed that Grayscale had issued a very large sum of funds between 2018 and 2021, with no way for investors to get out of their positions other than selling shares to other investors.
“The company’s mission is to help investors access the ever-expanding crypto ecosystem through a familiar, secure and transparent investment vehicle. We respect the views of our shareholders and value direct engagement with them regarding the details of our product, structure and operating model,” said a Grayscale spokesperson.
He continued to say, Grayscale is currently fully committed to converting GBTC into an ETF, although until now it has been rejected by the US Securities and Exchange Commission (SEC).
Regarding the lawsuit, Fir Tree also stated that there is no single legal reason that can stop GBTC investors from converting their positions into fiat, as long as the product complies with the securities law.
