Connect with us

Hi, what are you looking for?

Business

Alameda Research sues Grayscale for allegedly having a self-imposed refund prohibition

The FTX affiliate states that customers’ funds were lost due to Grayscale’s “improper” money block.

Alameda Research, a subsidiary of defunct cryptocurrency firm FTX, announced that it is fighting asset manager Grayscale Investments to recover client funds that were illegally withheld. Over the course of two years, FTX claims that Grayscale earned over $1.3 billion in “exorbitant” administration costs. It also claimed that Grayscale had made it impossible for investors to get their money out of the Bitcoin and Ethereum funds that it managed.

FTX stated that the markdown in value for these funds’ stock has reached around 50%. This implies that the Bitcoin or Ethereum backing each fund is worth is roughly half of what it originally was. According to the firm, FTX creditors would have at least $550 million more in value for their stock if Grayscale decreased its costs. The result would be a 90 percent rise in price.

New FTX CEO John J. Ray III, who is handling the crypto exchange’s insolvency, said in a statement published on Monday that Grayscale had a improper refund restriction that was preventing users from withdrawing their funds. Bankrupt FTX subsidiary Alameda Research applied for protection from its creditors in November. The action aims to release $9 billion or more in value for owners of the Grayscale Bitcoin and Ethereum Trusts and achieve over a quarter billion dollars in asset value for the FTX Debtors’ clients and debtors, according to a statement.

FTX customers and creditors will benefit from additional recoveries, along with other Grayscale Trust investors that are being harmed by Grayscale’s actions.

Said John J. Ray, CEO – FTX

After filing for bankruptcy in November, FTX CEO John J. Ray III stated that the lawsuit’s objective is to maximize returns and eventually restore funds to consumers and debtors. Creditors may receive over $250 million from the lawsuit against Grayscale.

For similar causes, Grayscale has been sued by other businesses. On December 6, 2022, a competing asset management company called Fir Tree Capital Management submitted a lawsuit with identical allegations. In a similar vein, that case sought to compel Grayscale to undo the price cut and open the refund window. On January 30th, Grayscale was sued by another firm, Osprey Holdings. That case involved a claim that Grayscale breached its contract by failing to transform its Bitcoin trust into an exchange-traded fund (ETF). Meanwhile, in December, Valkyrie Ventures put forth a salvage proposal for Grayscale’s Bitcoin Trust. According to the company, it can act as the fund’s administrator and facilitate redemption. It also announced its intention to start a strategic fund to supplement Grayscale’s product.

Advertisement

You May Also Like

Cryptocurrency

Bolivia's Banco Bisa has launched a custody service for the USDT stablecoin, allowing users to purchase, trade, and transfer cryptocurrencies in a controlled setting....

Cryptocurrency

Brian Armstrong, CEO of Coinbase, has called on the next SEC chair to apologize for the damage that uneven enforcement and regulations have done...

Elections

Former President Donald Trump is putting out a comprehensive tax reform plan that will replace the federal income tax with import duties. He defended...

Business

Meta is reportedly developing its own AI-based search engine to reduce its reliance on Google and Bing. Using Meta's AI chatbot, this new search...

polkadot
Polkadot (DOT) $ 3.89 1.31%
bitcoin
Bitcoin (BTC) $ 69,095.51 1.56%
ethereum
Ethereum (ETH) $ 2,502.30 0.60%
cardano
Cardano (ADA) $ 0.354493 3.32%
xrp
XRP (XRP) $ 0.512028 0.67%
stellar
Stellar (XLM) $ 0.092767 0.73%
litecoin
Litecoin (LTC) $ 69.96 1.38%