Grayscale, the digital asset management firm that is part of Barry SilbertCrypto conglomerate Digital Currency Group (DCG) is in hot water after being sued by industry rival Osprey Funds for promoting the Grayscale Bitcoin Trust (GBTC) fund.
in trialIn its January 30 filing in Fairfield Judicial District Superior Court in Connecticut, Osprey accused Grayscale of engaging in “unfair and deceptive acts and unfair competition” with its GBTC funds.
GBTC is an investment product that individual investors can buy from their brokerage accounts. The product has served as an alternative to spot bitcoin ETFs in the US, where no such ETF has yet been approved by the Securities and Exchange Commission (SEC).
Grayscale has publicly stated that it plans to convert GBTC into a BitcoinSupported Exchange-Traded Funds (ETF) after getting the go-ahead from the regulators. It is the claim that is now at the center of the lawsuit.
According to Osprey, which sponsors the competing Osprey Bitcoin Trust (OBTC), Grayscale has advertised GBTC as if its future conversion to an ETF is a “foregone conclusion.” However, this is far from the truth, Osprey claimed.
Osprey’s attorneys wrote in the lawsuit that “the possibility of converting the GBTC Bitcoin Trust to an ETF was never intended,” adding:
“Grayscale knew this message was false.”
Despite this, Grayscale ran “campaign after campaign” conveying that the conversion of GBTC to an ETF was “inevitable,” Osprey wrote.
False advertising reason for position of supremacy
Osprey further claimed in the lawsuit that the “false and misleading advertising” that Grayscale engaged in is the main reason the firm has managed to achieve such a dominant position in the market.
The firm said that Grayscale has a market share of around 99.5%, despite it charging “more than four times the asset management fee that Osprey charges for its services.”
According to the websites of the two companies, GBTC has an annual fee of 2%, while OBTC charges an annual fee of 0.49%.
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