Alameda Research, an affiliate of the now-bankrupt cryptocurrency exchange FTX, has withdrawn its lawsuit against Grayscale Investments. The legal action, initially filed in a Delaware court in March last year, accused Grayscale of engaging in practices that enriched the company at the expense of shareholders.
Alameda’s Withdraw Strengthens Grayscale’s Legal Position
Alameda Research, an affiliate of the bankrupt cryptocurrency exchange FTX, has withdrawn its legal action against Grayscale Investments. This lawsuit, filed in a Delaware court in March of the previous year, had charged the digital asset manager with profiting at the expense of its shareholders, according to a court document revealed on Monday.
The suit also alleged that Grayscale imposed excessive fees and denied investors the opportunity to redeem their shares from its two cryptocurrency-based trusts, namely the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust.
The lawsuit had also named Grayscale CEO Michael Sonnenshein, along with its parent entity, Digital Currency Group (DCG), and its CEO Barry Silbert as defendants. Following the withdrawal of the lawsuit by Alameda, a representative for Grayscale commented, highlighting that the company always viewed the legal action as baseless. ” Alameda’s voluntary dismissal underscores Grayscale’s position that this legal action was entirely without merit,” stated the spokesperson.
Earlier in the month, the Grayscale Bitcoin Trust (GBTC) commenced trading as an exchange-traded fund (ETF) on the NYSE Arca, following the approval from the U.S. Securities and Exchange Commission to transform the existing trust into an ETF.
Early trading data showed that the Grayscale Bitcoin Trust, recognized as the largest bitcoin fund with a valuation of $28 billion, led in share turnover. The fund’s trading volumes surpassed the $2 billion mark, indicating significant investor interest and activity.
However, the SEC announced a delay in deciding on the Grayscale Ethereum Trust’s application for a spot exchange-traded fund (ETF). Originally set for December 6, 2023, the decision has been pushed to January 25, 2024, indicating the SEC’s view on whether Ethereum is a commodity or a security.
FTX Aims To Recover In Billions
The trial of Sam Bankman-Fried has concluded, yet the bankruptcy proceedings of FTX continue to actively unfold. Under the guidance of John Ray III, the cryptocurrency exchange is rigorously working to reclaim billions of dollars for its creditors.
Last week, a federal appeals court mandated the appointment of an independent bankruptcy examiner to probe into the November 2022 downfall of FTX. Overturning a prior decision, the 3rd U.S. Circuit Court of Appeals in Philadelphia concurred with a government oversight body that the appointment of an examiner is compulsory under the U.S. Bankruptcy Code, given the substantial scale of FTX’s case. This includes the purported misappropriation of customer assets amounting to $10 billion.
Interestingly, Joseph Bankman and Barbara Fried, parents of Sam Bankman-Fried, have moved to dismiss a lawsuit from FTX, seeking to reclaim allegedly fraudulently transferred funds. This follows their son’s conviction on fraud charges, with sentencing due in March.