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Tuesday, February 7, 2023

Fir Tree Fund Sues Grayscale Bitcoin Trust

To learn more about its flagship Grayscale Bitcoin Trust (GBTC), New York-based Fir Tree Fund is suing cryptocurrency investment company Grayscale Investments in the Delaware Court of Chancery. This is done to look into possible conflicts of interest and mismanagement.

By cutting fees and resuming redemptions, Fir Tree Fund hopes to persuade Grayscale to address the large discount it trades at in comparison to the Bitcoin it owns. Additionally, Fir Tree asserted that roughly 850,000 Grayscale retail investors had suffered losses as a result of shareholder-unfriendly measures.

Fir Tree Fund Taking Things To Court

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Resuming redemptions and reducing costs The largest publicly traded crypto fund in the world, the trust has $10.7 billion in assets, and Fir Tree wants Grayscale to resume redemptions and reduce costs.

It enables American investors to track Bitcoin price changes without getting the actual asset. Fir Tree Fund also wants Grayscale to stop trying to turn GBTC into an exchange-traded fund (ETF).

Due to the significant decrease in the price of Bitcoin and the failure of several well-known cryptocurrency companies, including FTX, GBTC is currently trading at a record-low 43% discount to the price of the trust’s underlying Bitcoin and is down over 75% for the year. With the information it is gathering, Fir Tree hopes to persuade Grayscale into resuming activities, which are not currently visible to investors, and lowering fees from the current 2%.

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Holders of GBTC have few options for getting out of their investments other than to sell them to some other market participant because it does not provide a redemption program into cash or cryptocurrency.

The Digital Currency Group (DCG), which includes Grayscale Investments, has struggled since the demise of FTX, with Genesis banning client withdrawals last month.

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