FTX estate sold most of its Grayscale Bitcoin Trust Shares: Report

Alameda Research had previously sued Grayscale for allegedly creating a “self-imposed redemption ban.”
Tom Blackstone
Posted by Tom Blackstone January 22, 2024 2 Mins Read
Alameda Research had previously sued Grayscale for allegedly creating a “self-imposed redemption ban.”

The estate for failed crypto exchange FTX and hedge fund Alameda Research has sold more than two-thirds of its Grayscale Bitcoin Trust (GBTC) shares, according to a Jan. 22 report from Bloomberg. The report cited “two people familiar with the matter” as its source. The FTX estate may have raised at least $600 million as a result of the sale.

The report claims that the FTX estate held 22.28 million shares (worth $902 million at the time) of the Grayscale Bitcoin Trust before Jan. 11, when the trust was converted into a spot exchange-traded fund (ETF). FTX sold “more than two-thirds” of its shares over the following three days of trading, the report stated, implying that it now holds less than 8 million shares, worth roughly $281 million.

Alameda Research sued Grayscale in March for charging what it considered to be exorbitant fees. As part of the lawsuit, Alameda claimed that Grayscale was enacting a “self-imposed redemption ban” that prevented shareholders from acquiring the Bitcoin (BTC) held by its trust. Most investors had no means of redeeming their shares for the trust’s underlying Bitcoin prior to Jan. 11, and the trust’s share price was 44% below that of the Bitcoin it represented as of June 15.

Related: Bitcoin and ETF traders are overstating the impact of GBTC selling

However, redemptions for authorized participants were opened on Jan. 11, after the United States Securities and Exchange Commission approved the Grayscale Trust to be converted into an ETF. As the expected date of approval drew closer, the GBTC shares’ discount versus net asset value fell to 1.55%, according to data from YCharts. This made the price of these shares more closely align with the value of the Bitcoin they represented. GBTC is now only 0.27% below its net asset value per share.

More than $700 million of Bitcoin has been sold by the Grayscale Bitcoin Trust since Jan. 11, with some analysts claiming that investors are fleeing the fund because of what they see as high fees. On Jan. 22, Alameda dropped its lawsuit against Grayscale.

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