Alameda Research has voluntarily withdrawn its lawsuit against Grayscale Investments, filed in March 2023. The lawsuit alleged that Grayscale’s practices were suppressing the value of FTX debtors’ assets, with specific accusations regarding management fees and a claimed “self-imposed redemption ban.” This legal battle had been closely watched within the cryptocurrency community, as it involved prominent figures such as Grayscale CEO Michael Sonnenshein and Digital Currency Group (DCG) CEO Barry Silbert.
Alameda Research’s Allegations and Claims Against Grayscale
Alameda Research’s lawsuit aimed to secure injunctive relief against Grayscale’s alleged violations of trust agreements, particularly related to excessive management fees exceeding $1.3 billion. The suit argued that Grayscale’s practices, including what was termed a “self-imposed redemption ban,” were discouraging shareholders from redeeming shares in the Grayscale Bitcoin (GBTC) and Ethereum Trusts. The FTX hedge fund claimed that by reducing fees and allowing redemptions, the value of FTX Debtors’ shares could be significantly higher, potentially by 90%.
Read more: Grayscale CEO Warns of Limited Survival for Spot Bitcoin ETFs
Lawsuit Withdrawal and Grayscale’s Response
A Grayscale spokesperson in a written statement on Jan. 22:
“We are pleased to confirm that Alameda Research, FTX’s affiliated hedge fund, has voluntarily dismissed its lawsuit against Grayscale. Alameda’s voluntary dismissal underscores Grayscale’s position that this legal action was entirely without merit.”
Grayscale has welcomed the withdrawal of the lawsuit, emphasizing that Alameda Research’s decision to voluntarily dismiss the legal action underscores Grayscale’s position that the claims were entirely without merit. The cryptocurrency investment firm refuted the allegations and maintained its commitment to fair and transparent practices. The withdrawal comes after the conversion of GBTC into a spot exchange-traded fund (ETF) on January 10, approved by the United States Securities and Exchange Commission. Despite the conversion, GBTC has witnessed substantial outflows, resulting in a notable drop in assets under management to $23.7 billion on January 18.
Read more: SEC Delays Decision on Fidelity’s Ethereum ETF Amidst Coinbase Legal Battle
Conclusion
The conclusion of the legal dispute between Alameda Research and Grayscale marks a significant development in the cryptocurrency landscape. The lawsuit’s withdrawal suggests a resolution outside of the courtroom, with Grayscale maintaining its position on the meritless nature of the claims. As GBTC undergoes changes post-conversion, including a 1.5% management fee that remains higher than its competitors, the market will be closely monitoring how these developments impact the performance and perception of Grayscale’s offerings.
