Osprey sues Grayscale for misrepresenting likelihood of GBTC ETF approval

Digital plus manager Osprey Funds filed suit against Grayscale Investments successful Connecticut Superior Court connected Jan. 30, alleging usurpation of the state’s Unfair Trade Practices Act. The suit concerns Grayscale advertizing and promotion of the Bitcoin (BTC) exchange-traded money (ETF) it is seeking to create. 

Osprey stated successful the suit that it is the lone rival to Grayscale connected the over-the-counter traded Bitcoin spot plus absorption market, and Grayscale maintained its starring presumption done deceit:

“Only due to the fact that of its mendacious and misleading advertizing and promotion has Grayscale been capable to support to day astir 99.5% marketplace stock successful a two-participant marketplace contempt charging much than 4 times the plus absorption interest that Osprey charges for its services.”

Specifically, Osprey alleged that Grayscale promoted information successful its Grayscale Bitcoin Trust (GBTC) arsenic a means of accessing a spot-based Bitcoin ETF done the conversion of its $12-billion GBTC. Grayscale presented the conversion arsenic “a foregone conclusion, erstwhile it knew that entree was ne'er apt to happen,” according to the suit.

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Osprey alleged that Grayscale continued to telephone the conversion “‘likely,’ contempt knowing that specified a statement was false, arsenic the SEC had consistently rejected the anticipation of specified conversion for a Bitcoin commodity money since successful oregon earlier precocious 2020.” Osprey claimed that statements successful emails, property releases and Twitter, arsenic good arsenic Grayscale executives’ tv appearances, contained the mendacious information.

Dear @BarrySilbert, I person an thought for $GBTC. Give maine a buzz erstwhile you’re ready. We’re conscionable up the roadworthy from you successful Connecticut. pic.twitter.com/zVFHBLxSl0

— Greg King, CFA (@GregKingOsprey) January 13, 2023

The United States Securities and Exchange Commission officially denied Grayscale’s application to person its GBTC into an ETF connected June 29, 2022. Grayscale filed a petition for reappraisal successful the District of Columbia Court of Appeals the aforesaid day. The tribunal is expected to perceive oral arguments successful the lawsuit connected March 7.

Grayscale is portion of Digital Currency Group, which also owns Genesis Global Capital, the crypto lender that declared bankruptcy connected Jan. 19. Osprey has besides seen hard times recently. It has reportedly laid disconnected 15 unit members since past summer, leaving it with a unit of little than 10. Osprey is seeking an grant for damages from Grayscale and injunctive relief.