Fir Tree fund sues Grayscale in effort to force changes to Bitcoin Trust
Fir Tree Capital Management has filed a lawsuit against Grayscale Investments demanding information that could be used to force changes to the way it runs its flagship Bitcoin Trust.
According to Bloomberg, a Dec. 6 complaint was filed against Grayscale at the Delaware Court of Chancery and seeks to have Grayscale lower its fees, start redemptions and hand over documents relating to its relationship with the Digital Currency Group.
The hedge fund also wants to stop Grayscale’s efforts in converting its $10.7 billion Grayscale Bitcoin Trust (GBTC) into a spot exchange-traded fund (ETF).
In its complaint, the New York-based hedge fund said that around 850,000 retail investors had been “harmed by Grayscale’s shareholder-unfriendly actions.”
Shares in Grayscale’s Bitcoin trust currently trade at a near record 43% discount to the Net Asset Value (NAV) of its underlying digital asset, Bitcoin, according to data from Ycharts.
Much of the reason is due to the fact that GBTC holders have little to no means to exit their GBTC positions, except to sell them to another market participant as it does not offer a redemption program into fiat or crypto.
Fir Tree alleges Grayscale’s redemption bar, which dates back to 2014, is “self-imposed,” and claims Grayscale is refusing to redeem shares as that would cut into profits.
The firm also wants Grayscale to stop trying to convert the trust into an ETF which it has tried to do repeatedly over a number of years without success.
“That strategy will likely cost years of litigation, millions of dollars in legal fees, countless hours of lost management time, and goodwill with regulators,” Fir Tree’s lawyers said in the complaint. “All the while, Grayscale will continue to collect fees from the
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