Crypto asset manager Grayscale Bitcoin Trust (GBTC) has scored a major victory against the U.S. Securities and Exchange Commission in its efforts to convert its over-the-counter GBTC application into a listed Bitcoin ETF.
According to August 29 court filings, U.S. Court of Appeals Circuit Judge Neomi Rao ordered that Grayscale’s petition for review be granted and for the SEC’s order to deny the GBTC listing application to be vacated. Previously, Judge Rao said that the SEC did not “offer any explanation” as to why Grayscale was in the wrong. However, the order does not guarantee the listing of a Grayscale spot Bitcoin ETF.
On June 29, 2022, the SEC denied Grayscale’s application to convert GBTC into a listed spot ETF. The next day, Grayscale’s senior legal strategist, former U.S. Solicitor General Donald B. Verrilli Jr., filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit. At the time, Michael Sonnenshein, CEO of Grayscale, said in a statement the firm was “deeply disappointed” and “vehemently disagreed” with the SEC’s decision to deny their application.
Grayscale is the largest over-the-counter traded Bitcoin fund, with over $14 billion in market capitalization. Earlier this year, shares of GBTC traded at nearly 50% discount to the net asset value due to the firm’s then ongoing litigation with the SEC and credit concerns regarding its parent Digital Currency Group (DCG).
In October 2022, Grayscale terminated material agreements with its partner and digital currency broker Genesis Global. On Nov. 16, 2022, Genesis Global paused withdrawals, citing unprecedented market turmoil amid the collapse of cryptocurrency exchange FTX.
In January 2023, it was disclosed that DCG owes creditors over $3 billion and is considering a $500 million venture capital portfolio sale. Genesis Global owes $900 million alone to users of cryptocurrency exchange Gemini’s Earn program.
This is a breaking news story, and further information will be added as it becomes available.
