Collapsed Crypto Hedge Fund Drops Lawsuit Against Grayscale
The collapsed crypto hedge fund, Alameda Research, has decided to drop its lawsuit against Bitcoin fund manager Grayscale. This development paves the way for the failed crypto brand’s new management to sell shares in its recovery fund. A lawyer involved in retrieving customer funds confirmed this information to Decrypt.
Background: Alameda’s Lawsuit Against Grayscale
In March of last year, Alameda Research filed a lawsuit against Grayscale, claiming that the investments of its customers were being wrongfully withheld. The lawsuit alleged that Grayscale had an “improper redemption ban.” However, a recent court filing revealed that the lawsuit has been dropped by Alameda.
Grayscale Responds to Dismissal
Grayscale responded to the dismissal by stating that it underscores their belief that the legal action taken by Alameda was without merit.
The Transformation of GBTC
Grayscale’s Bitcoin Trust (GBTC) recently transitioned from operating as a closed-end fund to becoming an exchange-traded fund (ETF). This change made it easier for investors to redeem their funds and cash out. Since then, many investors have been quickly cashing out their shares, resulting in a significant decrease in the price of Bitcoin.
The Downfall of FTX and Alameda Research
FTX, once a prominent crypto brand with its own exchange platform, unexpectedly went bankrupt in November 2022 due to mismanagement. Alameda Research was a sister company of FTX. The co-founder of both companies, Sam Bankman-Fried, was found guilty of fraud and conspiracy charges last year. The new management of FTX is now focused on recovering funds for clients affected by the collapse.
Hot Take: Alameda Research Drops Lawsuit, Paving the Way for Recovery Fund Sales
The dropped lawsuit by Alameda Research against Grayscale is a significant development for the failed crypto brand’s recovery efforts. With the lawsuit out of the way, the new management can now proceed with selling shares in its recovery fund, aiming to retrieve lost funds for customers. This decision comes as Grayscale asserts that the legal action was baseless. Meanwhile, GBTC’s transition to an ETF has allowed investors to easily cash out their shares, impacting Bitcoin’s price. FTX’s downfall and subsequent bankruptcy have left its new management focused on recovering funds for affected clients.
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