FTX’s sister company, Alameda Research, willingly dismissed litigation action against Digital Currency Group’s Grayscale Investments shortly after spot BTC ETF approval.
Court filings from Jan. 22 showed that Alameda opted out of suing Grayscale, its CEO Michael Sonnenshein, its parent company Digital Currency Group’s (DCG), and founder Barry Silbert over a ban on Grayscale’s Bitcoin Trust (GBTC) redemptions.
The lawsuit submitted in March last year alleged that Grayscale implemented a self-dealing and unfair regulation ban that withheld over $9 billion in value from FTX’s bankrupt estate.
CEO John J. Ray III, FTX’s new boss following Sam Bankman-Fried’s resignation, said the suit sought injunctive relief at the time amid an amalgamation of assets earmarked for creditors and operational expenses.
A Grayscale representative who confirmed the news added that Alameda’s decision to withdraw upholds the asset manager’s view on the motion. Sonnenshein’s company had previously argued that the FTX-affiliated crypto trading firm had zero legal ground for a lawsuit.
Alameda’s about-face comes on the heels of regulatory nods from the Securities and Exchange Commission (SEC) toward spot Bitcoin ETFs. The development allowed Grayscale to convert its flagship fund, GBTC, into an exchange-traded fund underpinned by Bitcoin (BTC).
Private data cited by CryptoX reportedly revealed 22 million GBTC shares sold by FTX, a haul comprising $2 billion in outflows from Grayscale’s Bitcoin ETF since the SEC issued approval on Jan. 10.
The SEC was instructed to re-review spot Bitcoin ETFs after losing to Grayscale in court. Three Washington D.C. judges ruled that the SEC was “arbitrary and capricious” in denying spot BTC ETFs while already approving Bitcoin futures ETFs, which operate as a similar product.
