FTX Bankruptcy and Grayscale Lawsuit
• Alameda Research Ltd. is suing Grayscale Investments, LLC, its CEO, Michael Sonnenshein, and its owners, Digital Currency Group and Barry Silbert for allegedly extracting more than $1.3 billion in management fees while preventing shareholders from redeeming their shares.
• FTX Debtors are seeking injunctive relief to unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts.
• John J. Ray III, CEO of FTX Debtors stated that they will use every tool to maximize recoveries for FTX customers and creditors by unlocking the value suppressed by Grayscale’s self-dealing and improper redemption ban.
Alameda Research Ltd.
Alameda Research Ltd., belonging to disgraced ex-billionaire Sam Bankman-Fried is suing Grayscale Investments, LLC as a debtor affiliate of FTX. The lawsuit seeks injunctive relief to unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts (the “Trusts”) while realizing over a quarter billion dollars in asset value for the FTX Debtors’ customers and creditors. It further alleges that “Grayscale has for years hidden behind contrived excuses to prevent shareholders from redeeming their shares,” resulting in shares trading at 50% discount to Net Asset Value.
Valkyrie Investments has been pushing Grayscale to make structural changes to the trust including taking control of it if needed. Furthermore, CEO Michael Sonnenshein wrote a letter stating that should the Grayscale Bitcoin Trust fail to convert into an ETF, potential moves could include a tender offer of 20% of the $10.7 billion trust.
FTX went bankrupt in November 2022 leading them on a quest reacquire funds that could potentially rectify creditors . John J Ray III stated his goal was “to unlock value that we believe is currently being suppressed by Grayscale’s self-dealing and improper redemption ban” so they can benefit from additional recoveries along with other investors harmed by Grayscales actions as well
In conclusion, this lawsuit brought forward against Grayscale aims at liberating assets trapped behind self-dealing practices while providing monetary compensation through additional recoveries not only for their customers but other investors affected as well due to alleged improper practices such as preventing redemptions amongst others