Grayscale responded with objection to the SEC’s demands
2023.01.14 02:14
Grayscale responded with objection to the SEC’s demands
By Tiffany Smith
Budrigannews.com – In its appeal of the rejection of its application to convert its $12 billion Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin (BTC) exchange-traded fund (ETF), Grayscale submitted a reply brief. The SEC’s December reply brief was addressed in the brief, which was filed in the District of Columbia Circuit Court. It also reiterated its own arguments.
The findings that Grayscale’s proposal did not adequately safeguard against manipulation and fraud informed the SEC’s decision. Similar findings had been made by the agency in previous applications to create spot-based BTC ETFs.
1/ As part of our suit challenging the SEC’s decision to deny $GBTC conversion to a spot #bitcoin #ETF, @Grayscale just filed our Reply Brief with the DC Circuit Court of Appeals. Here’s what you need to know:
— Craig Salm (@CraigSalm) January 13, 2023
In court, Grayscale claimed that the SEC had acted arbitrarily in treating spot traded exchange-traded products differently from futures traded products in response to the denial. In its brief, Grayscale stated, “There is a 99.9% correlation between prices in the bitcoin futures market and the spot bitcoin market.” Additionally, it asserted that the SEC had exceeded its authority:
“The Commission is not permitted to decide for investors whether certain investments have merit – yet the Commission has done so, to the detriment of the investors and potential investors it is charged to protect,” the statement reads.
Craig Salm, chief legal officer of Grayscale, tweeted, “The case is moving quickly.” Oral arguments may take place as soon as Q2 [2023] despite the uncertain timing. In October 2021, Grayscale submitted an application to the SEC, which on June 29 rejected that application.
On December 6, Fir Tree Capital Management filed a lawsuit against Grayscale, requesting, among other things, that the company give up its appeal of the SEC decision. According to the complaint, “that strategy will probably cost years of litigation, millions of dollars in legal fees, countless hours of lost time by management, and goodwill with regulators.”
The Digital Currency Group, which is experiencing financial difficulties right now, owns Grayscale.
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