Bankrupt cryptocurrency trading firm Alameda Research is suing asset manager Grayscale in a bid to unlock more than $250m of assets for debtors of sister company FTX.
Filed in the Court of Chancery in Delaware, the suit accuses Grayscale of mismanagement of its Bitcoin and Ethereum trusts, allowing shares to trade at around 50% discount to their net asset value.
Alameda alleges that Grayscale and its owner Digital Currency Group has “in the past two years alone… extracted over $1.3 billion in exorbitant management fees in violation of the Trust agreements”.
It added: “Grayscale has for years hidden behind contrived excuses to prevent shareholders from redeeming their shares.”
Alameda said that should Grayscale reduce its fees and allow redemptions, shares held by debtors of collapsed cryptocurrency exchange FTX would be worth at least $550m – 90% more than their current value.
“We will continue to use every tool we can to maximise recoveries for FTX customers and creditors,” said John J. Ray III, CEO and chief restructuring officer of the FTX debtors.
“Our goal is to unlock value that we believe is currently being suppressed by Grayscale’s self-dealing and improper redemption ban.”
Describing the suit as “misguided” to several publications, Grayscale stated: “Grayscale has been transparent in our efforts to obtain regulatory approval to convert GBTC (Grayscale Bitcoin Trust) into an ETF (exchange-traded fund) – an outcome that is undoubtedly the best long-term product structure for Grayscale’s investors.”
Meanwhile the White House is monitoring the situation at Silvergate, the latest cryptocurrency company which seems to be at risk of folding.
Press secretary Karine Jean-Pierre said the Biden Administration was aware that the crypto bank was “experiencing significant issues”.
She added: “In recent weeks, banking regulators have released guidelines on how banks should protect themselves from risks associated with crypto.
“This is a President that has repeatedly called on Congress to take action to protect everyday Americans from the risk posed by digital assets and he will continue to do so.
“We won’t speak to this particular company as we have not with other cryptocurrency companies, but we will continue to monitor the reports.”