In June 2022, Grayscale sued the Securities and Exchange Commission (SEC) after the regulator again refused to convert Grayscale Bitcoin Trust (GBTC) into a spot ETF. The case is expected to continue in the second half of 2023, but Grayscale has come forward to reveal plans if the court will side with the SEC.
Still Not Backing Up, Plans to Appeal
Oral arguments in Grayscale Investments’ lawsuit against the SEC have been scheduled for March 7, 2023. That date came earlier than expected but has been accelerated due to Genesis filing for bankruptcy and possible liquidity problems at its parent company Digital Currency Group, which is its umbrella. Grayscale is operating.
However, Grayscale appears poised as CEO Michael Sonnenshein says the company won’t back down if the SEC wins. Sonnenshein said that Grayscale will file an appeal if the court sides with the SEC’s rejection of the spot bitcoin ETF.
Since the case is currently being handled by the District of Columbia Court of Appeals, an appeal to the court would move the case to a U.S. Supreme Court trial or en banc panel review. An en banc panel review is a situation in which all of the appeals court judges sit to hear a case, and is only reserved for very important or complex cases.
Grayscale is determined to turn GBTC into a bitcoin ETF point as it believes that this is the only way to reconcile the wide discount for nav funds trading in, as well as provide the most value to its investors.
GBTC share price struggling to hold $12 | Source: Grayscale Bitcoin Trust on TradingView.com
Grayscale Bitcoin Trust Not Affected by Genesis
When Genesis filed for bankruptcy last week, questions made the rounds in the crypto community as to whether it would affect Grayscale Bitcoin Trust. GBTC is currently the world’s largest bitcoin trust with more than $14.5 billion in assets under management, with more than 600,000 BTC. Naturally, if the fund is affected and GBTC has to be liquidated, it will be dangerous for the crypto market.
However, Sonnenshein has assured investors that GBTC will not be affected by events at Genesis or DCG. “Grayscale is an independent entity with leadership, governance, budget, policies and procedures, and the assets that support the Grayscale family of products owned by our shareholders,” the CEO said.
Grayscale discount above 41% | Source: YCharts
As for GBTC, it continues to trade at a steep discount. It has begun to recover from a 48.9% discount for nav recorded in December, but still has a long way to go. Currently, the GBTC discount is still hovering above 41%, according to data from YCharts.