The US crypto investment firm Grayscale Investments (https://grayscale.com) has sued the U.S. Securities and Exchange Commission (SEC) after the regulator rejected its application to transform its flagship Grayscale Bitcoin Trust into a spot Bitcoin Exchange-Traded Fund (ETF). The SEC rejected Grayscale’s application because the $40B Bitcoin Trust failed to meet consumer protection requirements including measures “designed to prevent fraudulent and manipulative acts and practices.”
“Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation – and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the U.S. market.”
After the ruling Grayscale filed a petition for review with the appeals court in the District of Columbia to challenge the SEC’s rejection. Grayscale argues that the SEC has to allow products that are like other products for trading, in this case, Bitcoin futures ETFs. Donald Verrilli, Grayscale’s senior legal strategist, said that the SEC was “failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously”.
Embattled Singapore hedge fund Three Arrows Capital, lending platform BlockFi and Ark Investment management are among the biggest holders of Grayscale trust shares, according to Refinitiv data.
