With Grayscale’s Bitcoin Trust now freely allowing redemptions, the collapsed trading firm Alameda Research has swiftly dropped its lawsuit seeking to unlock its trapped investments in the fund. The move appears aimed at swiftly freeing up Alameda’s shares to sell off amidst a rush of withdrawals.
- Alameda Research drops lawsuit against Grayscale Bitcoin Trust
- Allows Alameda to access investments as Grayscale redemptions open
- Follows Grayscale Bitcoin Trust converting to spot BTC ETF
- Billions already redeemed, crashing GBTC price and Bitcoin itself
- Alameda likely seeking to redeem shares to aid FTX bankruptcy case
- FTX, Alameda collapsed amid mismanagement and fraud allegations
Alameda Research, the trading firm founded by disgraced FTX CEO Sam Bankman-Fried, filed suit against Grayscale Investments in 2022 alleging its Bitcoin Trust wrongfully froze redemptions. But with Grayscale now allowing investors to cash out their shares, Alameda wasted no time withdrawing its lawsuit this week.
The likely incentive? Taking advantage of the plunging value of Grayscale Bitcoin Trust shares as early investors stampede to exit, before it falls further. This would allow Alameda to recover some lost funds to help pay back billions owed to FTX customers after its catastrophic failure.
With Grayscale converting its trust to a spot-price Bitcoin ETF fully redeemable for BTC itself, it triggered a flood of withdrawals. The selling pressure crashed GBTC’s famous premium to a record discount versus Bitcoin’s actual price. Billions were redeemed in days, sparking fears of yet more downward pressure on Bitcoin.
Alameda seems poised to add to that redemption rush, no longer encumbered by its own lawsuit. The move follows the firm’s takeover by new management focused on retrieving assets for FTX bankruptcy proceedings. Their aim is recovering money for misled customers and investors affected by alleged fraud that led to FTX’s demise.