Grayscale’s Bitcoin Trust has gained about 18% this week following a three-judge panel hearing concerning the company’s efforts to turn GBTC into a spot Bitcoin ETF. During the hearing, the judges were sceptical about the SEC’s reasoning for blocking prolonged Grayscale efforts to offer a Spot Bitcoin product, and shortly after the hearing, the ticker quickly flipped green, gaining 10% in a couple of hours.
The GBTC trust exchanges hands at $13.23 following the successful day in court.
GBTC discount narrows following successful day in court
For well over a year, Grayscale has been attempting to turn its flagship Bitcoin Trust into America’s first spot Bitcoin exchange traded fund. However, its efforts have been repeatedly thwarted, to the point where regulators intentions’ have come into doubt. Specifically, the Securities and Exchange Commission has continually created an uneven regulatory playing field for investors by approving risky futures-based ETFs, while continuously denying spot Bitcoin ETF applications.
The hostile moves have been met with accusations of purposeful and calculated efforts at needless capital destruction. After months locked at loggerheads, the crypto company sued the SEC in the summer of 2022, calling its refusals discriminatory.
Grayscale finally got its day in court on Tuesday, March 7th. According to the Commission’s argument, futures products are more resistant to market manipulation as opposed to spot market products. At the end of the hearing, the three-judge panel wasn’t convinced by the SEC’s argument that a spot Bitcoin ETF shouldn’t be allowed on the proposed grounds. While the final decision is still months away, investors read this week’s hearing as a fairly clear and decisive victory for Grayscale.
F0llowing the argumentative session in court, Grayscale Bitcoin Trust (GBTC) began rising precipitously, ending the day 9.60% (Tuesday) in the green at $12.90—one of its highest price points in the last six months. The infamous NAV discount narrowed to and fell below 35%—the lowest it had been since October.
Grayscale still under pressure
While the Tuesday hearing appears to bode well for GBTC’s scuffle with regulators, the company still faces a deluge of lawsuits from various companies across the board. This includes a somewhat ironic complaint unveiled on March 6th by ex-FTX CEO and fraudster Sam Bankman Fried. Alameda Research is suing Grayscale in an effort to lower fees and recover funds worth at least $9 billion. The lawsuit also alleges that Grayscale is unjustly preventing shareholders from accessing their assets and that its policies are to blame for GBTC’s trading discount. A Grayscale spokesperson, in turn, called the lawsuit misguided. More recently, Osprey Funds sued Grayscale claiming it made “false and misleading” statements in regards to GBTC’s conversion into an ETF.
Meanwhile, the former FTX management also face their own series of legal woes. In February, FTX creditors subpoenaed SBF and insiders who must provide details related to the exchange’s implosion. Sam Bankman Fried was in the Bahamas on Dec. 12, 2022, following the spectacular implosion of defunct exchange FTX, and the bizarre events that followed.
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