Grayscale says recent events will not affect GBTC conversion case against SEC Grayscale says recent events will not affect GBTC conversion case against SEC
Craig Salm said GBTC conversion to a spot BTC ETF will "effectively close the current discount to NAV and unlock over $4 billion of value."
2 min read
Updated: Jan. 12, 2023 at 9:09 am UTC
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Grayscale’s chief legal officer Craig Salm said on Jan. 12 that he does not expect the recent spate of events in the crypto space to impact its case against the SEC.
Recent crypto events won’t impact Grayscale’s case
According to him, the lawsuit is about “determinations on questions of law.” He added that despite the SEC’s reluctance and perceptions of the crypto industry, “this is a legal case about fair and equal treatment under the law.”
Salm said:
“[Recent] events and speculation surrounding Terra/LUNA, 3AC, Celsius, Voyager, FTX, Alameda, BlockFi, Genesis Capital, Gemini, DCG, or anyone else are not relevant to the ultimate question the Court will have to answer.”
He said the case is to determine if the SEC acted arbitrarily and capriciously and discriminated against issuers in denying GBTC conversion to a spot ETF. At the same time, it had approved ETFs that hold futures.
GBTC conversion to spot ETF could help close discount
Salm tweeted that the lawsuit was “most important” for the over 850,000 GBTC shareholders.
According to him, converting GBTC to a spot BTC ETF will “effectively close the current discount to NAV and unlock over $4 billion of value.”
“An ETF is unquestionably the best long-term way for GBTC to track the value of its Bitcoin.”
Meanwhile, if their efforts were to fail, Salm said the firm would consider alternative solutions to the situation. This included a tender offer for a portion of GBTC shares subject to the SEC’s approval.
Salm added:
“Anyone telling you GBTC can simply redeem shares today is most likely not a lawyer, and doesn’t understand the complexities of securities laws and its tender offers rules (distinct from Reg M). Just as there are approvals needed to convert GBTC to an ETF and operate an ongoing redemption, there are other distinct approvals needed for GBTC to fairly return capital to shareholders in other ways, such as through a tender offer.”
Calls for more community support
Salm urged the crypto community to support its lawsuit because a spot Bitcoin ETF would further open up access to the digital asset. He said his firm was fighting for BTC’s future and urged anyone “long Bitcoin” to support its case.
Meanwhile, he noted that the firm already enjoys a level of support from the crypto community. According to him, Grayscale got five amicus briefs in support of its opening motion.
Besides that, the firm received a record-breaking 11,600 comment letters supporting its ETF application process.
Mentioned in this article
Bitcoin 
Grayscale Investments 
Digital Currency Group 
Genesis 
Celsius Network 
Voyager 
Alameda Research 
FTX 
BlockFi 
Gemini Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Grayscale Investments
Established in 2013 by Digital Currency Group, Grayscale Investments is a trusted authority on digital currency investing and cryptocurrency asset management.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerage providing a single point of access for select qualified individuals and global institutional investors.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Voyager
Voyager Digital is a bankrupt cryptocurrency exchange company in the United States that was founded in 2018.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
BlockFi
BlockFi is a defunct cryptocurrency lender company which is currently in bankruptcy proceedings.
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.