Katherine Greifeld
Grayscale Investments said it had sued the US Securities and Exchange Commission after the agency rejected a bid to convert its Bitcoin trust into an exchange-traded fund.
Chief Executive Officer Michael Sonnenshein tweeted late Wednesday that Grayscale was suing the regulator and the company said it had filed a lawsuit in US Court of Appeals for the D.C. Circuit.
The SEC on Wednesday the company’s application to convert its Grayscale Bitcoin Trust into the first ETF based on the world’s biggest cryptocurrency. The regulatory body found that the nyse arca plan to list the product was not sufficient to prevent fraud and handling.
"We remain focused on converting to an ETF," people said in a televised interview with bloomberg on Thursday. "After receiving the rejection from the Sec, our lawyers filed a motion for review with the Court of Appeal. We were led to believe that it could be, say, nine to twelve months on this decision. That might be a bit longer, a bit shorter."
Read more: The SEC rejects the Grayscale offer to convert the largest Bitcoin fund into an ETF.
SEC didn't want to comment.
Grayscale, which its plan in October, had been hinting for months that it would sue if the application was rejected.
The conversion of gbtc to ETFs would have solved a persistent grey-scale problem: the high discount of the trust against its underlying investments. In contrast to an ETF, gbtc equities cannot be created and bought back to keep pace with changing demand. That actually transforms gbtc into a closed fund, the price of gbtc being 28% less than its net asset value.
At a meeting with us, regulators, on a grey scale, converting to ETFs would free up $8 billion worth of value for investors.
In a communique, Donald Verrilli, Munger's partner, Tolles.
"we are deeply disappointed and in disagreement with the decision of the sec to continue to refuse spot bitcoin etfs to come to the US market," sonnenshein, grayscale’s ceo, stated in the declaration.
Bitcoin is on the pace of its largest quarter-on-quarter decline in over a decade. The largest cryptocurrency at market value dropped from approximately 5.6% to $19.057 at 12:12 pm in New York, and has decreased by 58 percent since March, the most significant decline since Q3 2011, in the early days of digital assets.
— With assistance by Allyson Versprille and Vildana Hajric