Fir Tree Capital Management said it reached an agreement with Grayscale Investments that resolves a lawsuit the hedge fund had filed against the crypto firm last year in connection with the $19.3 billion Grayscale Bitcoin Trust.
(Bloomberg) — Fir Tree Capital Management said it reached an agreement with Grayscale Investments that resolves a lawsuit the hedge fund had filed against the crypto firm last year in connection with the $19.3 billion Grayscale Bitcoin Trust.
Under the agreement, Grayscale will produce documents tied to the trust, which is known by its ticker GBTC, according to a Tuesday release. The December 2022 lawsuit sought information to investigate potential mismanagement and conflicts of interest at the trust, Bloomberg reported at the time.
GBTC trades at a discount to its underlying Bitcoin holdings. Fir Tree wanted to use the information as part of efforts to push Grayscale to erase that discount by lowering fees and resuming redemptions. Grayscale, meantime, has been seeking to convert the trust into an exchange-traded fund.
Read more: Hedge Fund Sues Grayscale for Data on Battered Bitcoin Trust
In announcing the resolution, Fir Tree said it still believes Grayscale “can and should” conduct a tender offer. Redemptions of outstanding GBTC shares would allow holders to recoup billions in value, it said, which would be a “win-win solution” and would begin to address some of the hedge fund’s concerns surrounding the trust.
“Fir Tree’s lawsuit highlighted concerns about Grayscale’s refusal to allow redemptions despite the lack of any relevant regulatory restrictions, GBTC’s extensive conflicts of interest and lack of independent oversight, and its campaign to convert GBTC into an ETF,” Fir Tree’s press release said on Tuesday.
A Grayscale spokesperson Tuesday said the company is “pleased to resolve” what they characterized as Fir Tree’s “meritless lawsuit.”
Grayscale is owned by Barry Silbert’s Digital Currency Group. GBTC has for years been a favored way for investors to gain access to crypto. The trust currently trades at a discount of about 28% to its underlying holdings, according to data compiled by Bloomberg.
Earlier: BlackRock’s Shock Bitcoin ETF Filing Helps Repair GBTC Discount
Grayscale is currently suing the US Securities and Exchange Commission in an attempt to convert GBTC into an ETF, something the regulator hasn’t allowed in the past. Many analysts see the company as potentially being successful in its fight, though a ruling hasn’t yet come down.
“It’s widely understood that the conversion of GBTC to an ETF is the best long-term product structure for all investors,” the Grayscale spokesperson said on Tuesdsay. “At Grayscale, we are 100% committed to that endeavor and look forward to the D.C. Circuit Court’s decision in our lawsuit against the SEC by the fall of 2023.”
–With assistance from Katherine Burton, Jef Feeley and Katie Greifeld.
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