Alameda Sues Grayscale and DCG to Allow Redemptions, Reduce Fees

The bankrupt trading firm is seeking injunctive relief to allow FTX debtors to realize what it claims is more than $250 million in asset value.

AccessTimeIconMar 6, 2023 at 7:37 p.m. UTC
Updated Mar 7, 2023 at 1:30 p.m. UTC

FTX sister company Alameda Research has filed a lawsuit against crypto asset manager Grayscale Investments seeking injunctive relief to realize what it claims is over $250 million in asset value for the FTX Debtor’s customers and creditors, according to a press release.

The suit was filed in the Court of Chancery in Delaware. It also asserts claims against Grayscale CEO Michael Sonnenshein and Grayscale owner Digital Currency Group (DCG) and its CEO, Barry Silbert.

DCG is also the owner of Coindesk.

According to Alameda’s complaint, Grayscale has extracted exorbitant management fees for its management of the Grayscale Bitcoin and Ethereum trusts, and has allowed those trusts’ shares to trade at roughly a 50% discount to their net asset value.

The complaint asserts that if Grayscale reduced its fees and allowed redemptions, FTX Debtors shares would be worth at least $550 million, or roughly 90% more than their current value.

"We will continue to use every tool we can to maximize recoveries for FTX customers and creditors,” said John J. Ray III, CEO and chief restructuring officer of the FTX Debtors, in a statement. “Our goal is to unlock value that we believe is currently being suppressed by Grayscale's self-dealing and improper redemption ban.”

In an email to CoinDesk, a spokesperson for Grayscale called the lawsuit "misguided," adding that "Grayscale has been transparent in our efforts to obtain regulatory approval to convert GBTC into an [exchanged-traded fund] – an outcome that is undoubtedly the best long-term product structure for Grayscale’s investors."

Grayscale is set to appeal the SEC's decision to reject Grayscale's application to convert GBTC into an ETF at a hearing on Tuesday before the Washington, D.C., Circuit Court of Appeals.

UPDATE (March 6, 20:42 UTC): Added comment from Grayscale.


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Nelson Wang

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