The CEO of Grayscale, as well as the owners of Digital Currency Group and Barry Silbert, allegedly violated the trust agreements, according to the lawsuit.
Alameda Research Ltd., the hedge fund owned by disgraced former billionaire Sam Bankman-Fried, is suing Grayscale Investments, LLC, its CEO Michael Sonnenshein, and its owners Digital Currency Group and Barry Silbert as a debtor affiliate. from FTX.
according to a Press release Announcing the lawsuit, “FTX debtors are seeking injunctive relief to unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts (the “Trusts”) and obtain more than a quarter of a billion dollars in asset value for clients of FTX debtors and creditors.”
The statement describes how Grayscale has “extracted” more than $1.3 billion in administration fees while violating trust agreements. In addition, the complaint alleges that “Grayscale has hidden for years behind fabricated excuses to prevent shareholders from redeeming their shares,” and the company’s actions have resulted in the shares trading at a 50% discount over the liquidation value.
“If Grayscale were to lower its fees and stop inappropriately preventing redemptions,” the lawsuit alleges, “the debtors’ shares of FTX would be worth at least $550 million, approximately 90% more than the current value of the debtors’ shares. of FTX today”.
Grayscale has faced increasing pressure to make structural changes to the trust, including Valkyrie Investments seeking to take over the trust. Grayscale CEO Michael Sonnenshein also stated in a letter to investors that if the Grayscale Bitcoin Trust does not become an exchange-traded fund (ETF), potential moves could include a public offering of 20% of the trust for $10.7 billion.
As for FTX, which went bankrupt in November 2022, the search continues to buy back funds that could rectify creditors.
“We will continue to use whatever tools we can to maximize recoveries for FTX clients and creditors,” said John J. Ray III, CEO and Head of Restructuring for FTX Debtors. “Our goal is to unlock the value we believe is currently being generated suppressed by Grayscale’s own trading and improper redemption ban. FTX clients and creditors will benefit from additional recoveries, along with other Grayscale Trust investors who are being harmed by Grayscale’s actions”.
