Alameda Research, an affiliate of the now-bankrupt cryptocurrency exchange FTX, has dropped its lawsuit against Grayscale Investments.
The lawsuit, filed in March last year in a Delaware court, accused Grayscale of enriching itself at the expense of its shareholders, in addition to alleging that the firm charged exorbitant fees and did not allow investors to redeem their shares of Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust.
The withdrawal of the lawsuit comes at a key time, as Grayscale has undergone significant changes since the approval by the United States Securities and Exchange Commission (SEC) to convert its GBTC into an exchange-traded fund (ETF).
The successful conversion addressed Alameda’s primary concern about investors ability to redeem their shares.
Since GBTC began trading as an ETF on NYSE Arca earlier this month, there has been a mass exodus of more than $2 billion, with FTX being the largest contributor by selling 22 million shares, valued at nearly $1 billion.
The trigger for this wave of selling was the approval of several Bitcoin ETFs, including Grayscale’s, by the SEC.
Despite optimistic expectations, the price of Bitcoin has experienced a drop, generating a strong contrast with the bullish forecasts that were held before the SEC announcement.
FTX ‘s GBTC sell-off appears to have contributed to this downtrend
The fiscal situation of FTX, which filed for insolvency in November 2022, has added an additional dimension to the overall situation.
The economic challenges facing FTX, after filing for bankruptcy during the aforementioned period, have brought an additional layer of complexity to the current landscape.
The insolvency proceedings initiated by FTX since its bankruptcy have had a notable impact on the overall narrative, introducing further uncertainty into the unfolding events.
In an effort to recover assets and pay its creditors, FTX has been selling several assets in recent weeks, including over 63,000 BTC.
The withdrawal of the lawsuit by Alameda Research appears to indicate a change in focus, possibly influenced by recent events in the cryptocurrency market.
A Grayscale spokesperson said the voluntary withdrawal of the lawsuit reinforces the firm’s position that the legal action was completely without merit from the beginning.
The withdrawal of the lawsuit, the successful conversion of GBTC into ETFs, the GBTC sell-offs led by FTX, and the evolving financial situation highlight the complexity and ever-changing dynamics of the cryptocurrency market.