• Alameda Research has filed a lawsuit against Grayscale Investments in the Delaware Court of Chancery, claiming that Grayscale has charged over $1.3 billion in management fees and is preventing shareholders from redeeming their shares.
• The suit seeks to “unlock” $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts, as well as realize over a quarter billion dollars in asset value for FTX Debtors‘ customers and creditors.
• Alameda owns 22 million shares in Grayscale’s Bitcoin (BTC) Trust and 6 million shares in its Ether (ETH) Trust.
Alameda Research Files Suit Against Grayscale
Alameda Research has filed suit against Grayscale Investments in the Court of Chancery in the State of Delaware, it announced on March 6. The bankrupt cryptocurrency trading firm also made claims against Grayscale CEO Michael Sonnenshein, Grayscale owner Digital Currency Group (DCG) and the group’s CEO Barry Silbert. Alameda Research is an affiliate debtor of FTX, which filed for bankruptcy in November.
Claims Made By Alameda Research
The suit seeks to „unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts […] and realize over a quarter billion dollars in asset value for the FTX Debtors‘ customers and creditors,“ according to a statement. The plaintiff claimed Grayscale charged over $1.3 billion in management fees in violation of trust agreements. In addition, it „contrived excuses“ to prevent shareholders from redeeming their shares in what the statement described as a „self-imposed redemption ban.“ As a result, the statement continued, the Trusts‘ shares trade „at approximately a 50% discount to Net Asset Value.“ Therefore, the plaintiff claimed:
„Unlocking“ Value For Shareholders
„If Grayscale reduced its fees and stopped improperly preventing redemptions, the FTX Debtors‘ shares would be worth at least $550 million, approximately 90% more than the current value of the FTX Debtors‘ shares today.“ According to the Financial Times, Alameda owns 22 million shares in Grayscale’s Bitcoin (BTC) Trust and 6 million shares in its Ether (ETH) Trust.
Compensation Sought By Plaintiff
The plaintiff is seeking compensation for alleged damages caused by these actions taken by defendants as well as an injunction preventing further interference with shareholder rights under Delaware law. Additionally, they are asking that all management fees collected by defendants be returned to shareholders along with any profits gained through alleged breaches of fiduciary duty or other unlawful conduct committed by defendants while overseeing trust assets.
This case represents another example of how companies can be held accountable when they fail to act responsibly when managing investor funds or fail to adhere to trust agreements set forth between parties involved with investments managed by them. It remains unclear how this case will pan out but investors should keep an eye on developments as it could have implications across many different markets if successful