Osprey sues Grayscale for misrepresenting likelihood of GBTC ETF approval

cointelegraph.com:

Digital asset manager Osprey Funds filed suit against Grayscale Investments in Connecticut Superior Court on Jan. 30, alleging violation of the state’s Unfair Trade Practices Act. The suit concerns Grayscale advertising and promotion of the Bitcoin (BTC) exchange-traded fund (ETF) it is seeking to create. 

Osprey stated in the suit that it is the only competitor to Grayscale on the over-the-counter traded Bitcoin trust asset management market, and Grayscale maintained its leading position through deceit:

Specifically, Osprey alleged that Grayscale promoted participation in its Grayscale Bitcoin Trust (GBTC) as a means of accessing a spot-based Bitcoin ETF through the conversion of its $12-billion GBTC. Grayscale presented the conversion as “a foregone conclusion, when it knew that access was never likely to happen,” according to the suit.

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Osprey alleged that Grayscale continued to call the conversion “‘likely,’ despite knowing that such a description was false, as the SEC had consistently rejected the possibility of such conversion for a Bitcoin commodity fund since in or before late 2020.” Osprey claimed that statements in emails, press releases and Twitter, as well as Grayscale executives’ television appearances, contained the false information.

Dear @BarrySilbert, I have an idea for $GBTC. Give me a buzz when you’re ready. We’re just up the road from you in Connecticut. pic.twitter.com/zVFHBLxSl0

The United States Securities and Exchange Commission officially denied Grayscale’s application to convert its GBTC into an ETF on June 29, 2022. Grayscale filed a petition for review in the District of Columbia Court of Appeals the same day.