• Alameda Research has filed a lawsuit against Grayscale Investments, Michael Sonnenshein, Digital Currency Group (DCG) and its CEO Barry Silbert in the Court of Chancery in the State of Delaware.
• The suit seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts” and recover funds for FTX debtors.
• The plaintiff claimed Grayscale charged over $1.3 billion in management fees and prevented shareholders from redeeming their shares through what they called a “self-imposed redemption ban.”
Alameda Research Files Suit Against Grayscale
Alameda Research has filed suit against Grayscale Investments, Michael Sonnenshein, Digital Currency Group (DCG), and its CEO Barry Silbert in the Court of Chancery in the State of Delaware. The bankrupt cryptocurrency trading firm also made claims against all four defendants on March 6th.
What’s at Stake
The suit seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts” and recover funds for FTX debtors. They are looking to unlock share value and management fees that they dispute through the Delaware Court of Chancery.
Grayscle Alleged Violations
The plaintiff claimed Grayscale charged over $1.3 billion in management fees in violation of trust agreements. In addition, it is alleged that they “contrived excuses” to prevent shareholders from redeeming their shares through what they described as a “self-imposed redemption ban.” This allegedly caused a 50% discount on Net Asset Value; if these allegations are true, then FTX Debtors’ shares would be worth 90% more than current value if these practices were discontinued by Grayscale Investments.
FTX Creditors Impacted
Alameda Research owns 22 million shares in Grayscales’s Bitcoin (BTC) Trust and 6 million shares in its Ether (ETH) Trust; this could potentially result in unlocking asset values up to 900 million dollars if successful – a major impact on FTX creditors with potential awards reaching upwards of 250 million dollars when you take into account other customers impacted by this suit as well.
Court Implications
The Court of Chancery describes itself as “a forum for the determination of disputes involving the internal affairs” involving Delaware corporations; this case is no exception as Fir Tree Capital Management filed a similar suit seeking remedies back December 2020 – an indicator that Alameda’s case will be heard with precedence given past court rulings on similar cases before it now being brought forth once again by another litigant using similar arguments against Grayscale Investments & affiliates .