• Alameda Research, the now defunct crypto exchange, is suing Grayscale for unlawfully holding investments and refusing to unlock them for customers.
• The lawsuit claims that Grayscale has an “improper redemption ban” which is preventing customers from getting their funds back.
• Grayscale has also been accused of extracting $1.3 billion in exorbitant management fees in violation of trust agreements.
Alameda Research Sues Grayscale
Alameda Research – an affiliate of the now defunct crypto exchange FTX – is suing Grayscale, the world’s largest bitcoin trust. The company claims Grayscale is unlawfully holding investments and refuses to unlock them so customers can receive due payments.
Reason Behind the Lawsuit
John J. Ray III – the new CEO of FTX and the man overseeing the bankruptcy proceedings for the company – says Grayscale has an „improper redemption ban,“ and that such a maneuver is preventing customers from getting funds they’re rightfully owed. In a statement, he said: FTX customers and creditors will benefit from additional recoveries, along with other Grayscale Trust investors that are being harmed by Grayscale’s actions. Grayscale has extracted over $1.3 billion in exorbitant management fees in violation of the trust agreements.
Naturally, a spokesperson for Grayscale is defending the company, and says the claims stemming from Alameda are „misguided.“ They mentioned: Grayscale has been transparent in our efforts to obtain regulatory approval to convert GBTC into an ETF [exchange-traded fund], an outcome that is undoubtedly the best long-term product structure for Grayscale’s investors.
Previous Controversy Surrounding Three Arrows Capital
Grayscale also saw controversy arise last year due to its ties to now failed crypto hedge fund Three Arrows Capital. The company says it held many shares in Grayscale, yet when it started to experience financial trouble and sought to recover the cash it had placed in the firm, recovery proved impossible.
The Death of FTX
FTX went bankrupt in November of last year after founder Sam Bankman-Fried admitted his firm was experiencing a liquidity crunch and needed fast cash to stay afloat. He then used customer funds illegally to pay off loans taken out by another one of his companies – an act which resulted in him being arrested on fraud charges as well as facing bankruptcy proceedings himself