FTX’s Alameda Research Resolves Dispute with Grayscale, Drops Lawsuit Regarding Fees and Share Redemption

Alameda Research, a subsidiary of the bankrupt FTX cryptocurrency exchange, has dropped its legal action against Grayscale Investments. The lawsuit, originally filed in a Delaware court in March of the previous year, accused Grayscale of benefiting itself at the expense of its shareholders, according to court documents revealed on Monday.
The suit also claimed that Grayscale imposed excessive fees and prevented investors from redeeming their shares from its Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust. The lawsuit named Grayscale CEO Michael Sonnenshein, parent company Digital Currency Group (DCG), and CEO Barry Silbert as defendants. Following Alameda’s withdrawal, a Grayscale representative commented that the company had always considered the legal action to be baseless. “Alameda’s dismissal confirms Grayscale’s view that this legal action was completely unfounded,” the spokesperson stated.
Earlier this month, the Grayscale Bitcoin Trust (GBTC) began trading as an exchange-traded fund (ETF) on the NYSE Arca, following approval from the US Securities and Exchange Commission to convert the existing trust into an ETF. Initial trading data showed that the Grayscale Bitcoin Trust, valued at $28 billion and recognized as the largest bitcoin fund, led in share turnover. The fund’s trading volumes exceeded $2 billion, indicating significant investor interest and activity.
However, the SEC recently delayed its decision on the Grayscale Ethereum Trust’s application for a spot ETF. The decision, originally set for December 6, 2023, has been pushed to January 25, 2024, indicating the SEC’s deliberation on whether Ethereum should be classified as a commodity or a security.
FTX, which is currently going through bankruptcy proceedings, is aiming to recover billions of dollars under the guidance of John Ray III. The cryptocurrency exchange recently concluded the trial of its founder, Sam Bankman-Fried. Last week, a federal appeals court mandated the appointment of an independent bankruptcy examiner to investigate the downfall of FTX in November 2022. The court agreed with a government oversight body that appointing an examiner is necessary given the magnitude of FTX’s case, including the alleged misappropriation of $10 billion in customer assets.
Interestingly, Joseph Bankman and Barbara Fried, the parents of Sam Bankman-Fried, have sought to dismiss a lawsuit from FTX that aims to recover fraudulently transferred funds. This comes after their son’s conviction on fraud charges, with sentencing scheduled for March.