If SEC Lawsuit is Denied, Grayscale May Seek Permission to Buy Back Bitcoin Trust Fund Shares

BNN Bloomberg | Katie Greifeld | Dec 19, 2022

BGTC discount relative to underlying BTC - If SEC Lawsuit is Denied, Grayscale May Seek Permission to Buy Back Bitcoin Trust Fund Shares

Boomberg

Grayscale Investments is considering appealing to the same US regulator that it’s currently suing for permission to buy back shares of its heavily discounted Bitcoin trust should the firm’s lawsuit fail. 

  • Grayscale Chief Executive Officer Michael Sonnenshein wrote in a letter to investors Monday:
    • A tender offer for up to 20% of the outstanding shares of the $10.7 billion Grayscale Bitcoin Trust (ticker GBTC) is one of the options that the digital asset manager is considering
      • That process, in which Grayscale would ask shareholders to sell back their GBTC shares at an agreed price, would require approval from the Securities and Exchange Commission that the agency “may not provide
    • "In the event we are unsuccessful in pursuing options for returning a portion of the capital to shareholders, we do not currently intend to dissolve GBTC, but would instead continue to operate GBTC without an ongoing redemption program until we are successful in converting it to a spot Bitcoin ETF"

See: 

SEC Rejects Bid to Turn the Largest Bitcoin Fund Into an ETF -> Grayscale Sues SEC

Grayscale Won’t Share Proof of Reserves

Grayscale Bitcoin Trust is Fundraising to Shore up the Books of Genesis

  • GBTC closed nearly 50% below the value of its underlying Bitcoin on Friday, Bloomberg data show. Unlike an exchange-traded fund, GBTC can’t redeem shares to keep pace with cooling demand, which has seen the dislocation widen to record levels in recent weeks as the trust sells off to a greater degree than Bitcoin itself.
  • The Grayscale letter lands as questions around the health of parent company Digital Currency Group swirl. The once-$10 billion conglomerate founded by Barry Silbert also owns crypto lender Genesis, which suspended withdrawals last month and is reportedly seeking to raise fresh capital to stave off bankruptcy.

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