• Alameda Research Ltd., the hedge fund belonging to Sam Bankman-Fried, is suing Grayscale Investments and its affiliates.
• The lawsuit alleges that Grayscale has „extracted“ more than $1.3 billion in management fees while preventing shareholders from redeeming their shares, resulting in them trading at a 50% discount to Net Asset Value.
• FTX Debtors are seeking injunctive relief to unlock $9 billion in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts and realize over a quarter billion dollars in asset value for FTX customers and creditors.
Alameda Research Ltd. Sues Grayscale
Alameda Research Ltd., the hedge fund belonging to disgraced ex-billionaire Sam Bankman-Fried, is suing Grayscale Investments, LLC, its CEO, Michael Sonnenshein, and its owners, Digital Currency Group and Barry Silbert as a debtor affiliate of FTX.
Lawsuit Alleges Self-Dealing by Grayscale
According to a press release announcing the lawsuit, „FTX Debtors are seeking injunctive relief to unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts (the „Trusts“) and realize over a quarter billion dollars in asset value for the FTX Debtors‘ customers and creditors.“ The release describes how Grayscale has „extracted“ more than $1.3 billion in management fees while violating trust agreements. In addition, the complaint alleges that „Grayscale has for years hidden behind contrived excuses to prevent shareholders from redeeming their shares,“ with the firm’s actions having resulted in shares trading at 50% discount to Net Asset Value.
Potential Solutions Being Discussed
If Grayscale reduced its fees and stopped improperly preventing redemptions,“ the lawsuit alleges, „the FTX Debtors‘ shares would be worth at least $550 million, approximately 90% more than the current value of the FTX Debtors‘ shares today.“Grayscale has faced mounting pressure to make structural changes to the trust, including Valkyrie Investments seeking to take the reins of the trust. Grayscale CEO Michael Sonnenshein also stated in a letter to investors that should the Grayscale Bitcoin Trust fail to convert into an exchange-traded fund (ETF), potential moves could include a tender offer of 20% of the $10.7 billion trust. As for FTX which went bankrupt in November 2022 ,the quest reacquire funds that could potentially rectify creditors goes on .
FTX Executives Speak Out
„We will continue to use every tool we can maximize recoveries for FTX customers and creditors,“ stated John J Ray III ,CEO Chief Restructuring Officer of t he FTx debtors .Our goal is unlock value tht we believe is currently being suppressed by grascale self dealing improper redemption ban .FTx customers annd Creditors will benefit from additional recoveries along with other grascale trust investors that are being harmed by grascale action“.
Conclusion
The legal battle between Alameda Research Ltd.,Grascale Investment LLC ,its CEOs ,affiliates continues with both sides fighting hard protect their respective interests .With billions money on line it remains be seen who come out top this case when all said done