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Grayscale is now neck deep with the lawsuit and there are many assumptions from members of the public with respect to the potential bottlenecks that the lawsuit might present.
The dates for hearing the oral argument in the ongoing lawsuit between Grayscale Investments and the United States Securities and Exchange Commission (SEC) has been expedited by the District Columbia Court of Appeals. As reported by CNBC, the Court has fixed March 7 as the date for both parties to present their oral arguments, fast-tracking a process that Grayscale had expected will not come until sometime in the second quarter.
Grayscale is one of the most prominent subsidiaries of the Digital Currency Group (DCG), Barry Silbert’s crypto empire that is facing liquidity strain through its broad exposure to the recently collapsed FTX Derivatives Exchange. Grayscale sued the SEC back in June last year after the financial markets regulator denied its application to convert its flagship Grayscale Bitcoin Trust (GBTC) to a full-fledged Bitcoin Exchange Traded Fund (ETF).
The SEC’s denial was hinged on the premise that Grayscale did not provide convincing evidence that it can prevent the underlying market manipulation that is peculiar to the digital currency ecosystem. After approving the Bitcoin Futures ETF from firms like ProShares, Grayscale Investments believes the SEC does not have the moral grounds to deny its application.
The lawsuit was filed in just about a week when it received a rejection from the commission and the firm went as far as hiring Donald B Verrilli to join its law team. Verrilli was a top Solicitor during the President Obama administration and he is known for his high-profile winnings at the time. With Verrilli’s input, the firm said it was confident of victory at the trials.
Grayscale’s request is not far-fetched and it just revolves around getting the court to review the SEC’s decisions and determine whether they are consistent with its previous rulings.
Grayscale vs SEC: Potential Bottlenecks
Grayscale is now neck deep with the lawsuit and there are many assumptions from members of the public with respect to the potential bottlenecks that the lawsuit might present. While the company has addressed some common frequently asked questions (FAQs) last year, it has notably promised to refund investors capital should it lose the lawsuit to the SEC.
As of January, the Grayscale Bitcoin Trust holds a total of $14.5 billion in assets under management, and though the crypto winter has caused a significant value plummet, the product is still revered as one of the most important in the crypto ecosystem.
With the lawsuit now in full steam, there are chances that the expedited argument hearing as determined by the Court of Appeals will imply the justice system wants a speedy resolution of the conflict. As it stands, investors may stand to benefit more should the lawsuit close before the bankruptcy proceedings of Genesis Global, another subsidiary of DCG is completed.
The assumption is that the bankruptcy may have an undertone that will stir Grayscale to liquidate the more than 600,000 Bitcoin assets it has in custody, a scenario that will impact investors much more.