Shareholders sue Grayscale for excessive fees and restrictive redemption policies

GrayscaleLitigation.com, a portal meant to connect shareholders of the Grayscale Bitcoin Trust and Grayscale Ethereum Trust for collective legal action against Grayscale Investments, has been launched by Alameda Research, UTXO Management, and Balch & Bingham LLP.

This legal action originates from concerns presented by Alameda Research, an FTX Trading debtor. Their major goal is to investigate Grayscale Trusts’ suspected malfeasance. FTX Trading, which just declared bankruptcy, announced the news on its official Twitter account.

Grayscale’s alleged high management fees, which FTX debtors argue breach the trust agreements, are at the heart of the dispute. Grayscale is also accused of using various techniques to prevent stockholders from redeeming their shares.

In response to these violations, FTX debtors are pushing for accountability from Grayscale. Their aim is to recover lost value and seek justice for what they perceive as consistent negligence on Grayscale’s part in protecting shareholders’ interests.

Grayscale has emphasized that the success of this initiative relies on the participation of current shareholders. To move forward with the legal action, participating shareholders must collectively own at least 10% of all shares within the trusts.

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To encourage shareholder involvement, Alameda is urging interested parties to submit their information on GrayscaleLitigation.com before the September 1, 2023 deadline. Importantly, Balch & Bingham LLP has committed to representing eligible shareholders at no financial cost to them during the legal proceedings.

The key goals of this legal action include obtaining a legal ruling that Grayscale and its controllers have breached the trust documents and Delaware law. Alleged violations encompass the failure to ensure competitive sponsor’s fees and the absence of a shareholder redemption program capable of reversing the current trading discounts within the trusts.