Alameda Research Drops Lawsuit Against Grayscale Amid GBTC Outflows
Alameda Research Ltd., the hedge fund associated with the bankrupt cryptocurrency exchange FTX, has voluntarily dropped its lawsuit against Grayscale Investments amid GBTC outflows. According to court filings from January 22, Alameda opted out of suing Grayscale, its CEO Michael Sonnenshein, its parent company Digital Currency Group’s (DCG), and founder Barry Silbert over a ban on Grayscale’s Bitcoin Trust (GBTC) redemptions. The lawsuit, filed in March 2023, alleged that over $9 billion in investor funds were trapped in Grayscale’s Bitcoin Trust (GBTC) after the collapse of FTX.
The lawsuit also claimed that Grayscale had excessively high fees. In March, Alameda Research initiated a lawsuit seeking an injunction to release over $9 billion in value for Ethereum and Grayscale Bitcoin Trusts (the Trusts) shareholders and over $250 million in asset value for FTX creditors and debtors. Alameda holds shares in Grayscale’s Ethereum Trust and Bitcoin Trust as part of FTX’s bankrupt portfolio.
The lawsuit alleges that Grayscale has drawn over $1.3 billion in extravagant management fees in the past two years, disregarding the Trusts’ agreements. The lawsuit was part of broader efforts to recover and maximize funds for FTX customers affected by the collapse of the cryptocurrency exchange. FTX is facing 36,075 customer claims totaling $16 billion, with approximately $3.1 billion owed to its top 50 corporate creditors, according to a bankruptcy filing from 2022.
CEO John J. Ray III, FTX’s new boss following Sam Bankman-Fried’s resignation, said the suit sought injunctive relief at the time amid an amalgamation of assets earmarked for creditors and operational expenses. A Grayscale representative who confirmed the news added that
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