Grayscale Investments has launched a authorized problem in opposition to the US Securities and Change Fee (SEC) after being denied its software to transform its Grayscale Bitcoin Belief (GBTC) right into a spot-based Bitcoin (BTC) exchange-traded fund (ETF).
On Wednesday, it introduced that its senior authorized strategist, former U.S. solicitor normal Donald B. Verrilli Jr., had filed a petition for evaluation with the US Courtroom of Appeals for the District of Columbia Circuit.
Verrelli said that the newest resolution exhibits that the SEC is appearing “arbitrarily and capriciously” by “failing to use constant remedy to comparable funding automobiles” and can be pursuing a authorized problem primarily based on the SEC’s alleged violation of the Administrative Process Act (APA) and Securities Change Act (SEA).
Grayscale Investments, which has $12.92 billion of property underneath administration in its GBTC, had been ready on a choice from the SEC to transform its flagship Bitcoin belief right into a spot-based ETF since submitting its software to the regulator on October 19, 2021.
In keeping with a submitting from the securities regulator on Wednesday, the appliance was disapproved “to guard traders and the general public curiosity” as a result of the proposal did not display how it’s “designed to forestall fraudulent and manipulative acts and practices.”
The choice got here out a full week earlier than the July 6 deadline and got here on the identical day as the same rejection of Bitwise’s Bitcoin exchange-traded product (ETP).
Michael Sonnenshein, Grayscale’s CEO, in an announcement on Wednesday, mentioned they have been “deeply upset” and “vehemently disagree” with the SEC’s resolution to disclaim their software.
We’ve filed a lawsuit in opposition to the SEC. $GBTC
— Sonnenshein (@Sonnenshein) June 30, 2022
“We are going to proceed to leverage the total assets of the agency to advocate for our traders and the equitable regulatory remedy of Bitcoin funding automobiles,” he mentioned.
Addressing his 19,400 Twitter followers, James Seyffart, an ETF analyst at Bloomberg Intelligence, mentioned that whereas the lawsuit has been filed, a courtroom ruling on the matter just isn’t anticipated till Q3 2023 to Q1 2024, which means that we might not see the GBTC going ahead any time quickly.
Gonna retweet this as a result of Grayscale has already filed their APA lawsuit for the $GBTC denial. Right here is our *estimated* timeline of occasions courtesy of @NYCStein. However issues are transferring quick. https://t.co/ql8a43W5vs
— James Seyffart (@JSeyff) June 30, 2022
Grayscale had been gearing up its authorized crew for a possible spat with the SEC. Earlier this month, the agency employed Donald B. Verrilli Jr., a former U.S. solicitor normal, to affix its authorized lineup.
Different attorneys in Grayscale’s authorized line-up embrace attorneys at Davis Polk & Wardwell LLP and its in-house counsel, together with Craig Salm, who serves as chief authorized officer.
Associated: Grayscale studies 99% of SEC remark letters help spot Bitcoin ETF
In March, Grayscale CEO Michael Sonnenshein informed Bloomberg that his agency would contemplate a lawsuit underneath the Administrative Process Act (APA) ought to the appliance for its Bitcoin Spot ETF be denied by the monetary regulator.
