Grayscale and Fir Tree agree to resolve lawsuit over bitcoin trust

Quick Take

  • Fir Tree Capital Management sued Grayscale for information in December to investigate potential mismanagement and conflicts of interest. 
  • Grayscale will provide documentation around the firm’s flagship product GBTC as part of the agreement announced on Tuesday. 

Fir Tree Capital Management and crypto asset management firm Grayscale Investments have reached an agreement to resolve a lawsuit the hedge fund filed against the firm last year, Bloomberg News reported.

Fir Tree Capital Management sued Grayscale for information in December to investigate potential mismanagement and conflicts of interest, according to Delaware court documents. As per the agreement announced Tuesday, Grayscale will provide documentation around the firm's flagship product GBTC.

The product, which is meant to offer exposure to bitcoin in the form of a security, often trades at a premium or discount to net-asset-value. Fir Tree's original complaint alleged that Grayscale investors have been harmed by "shareholder-unfriendly actions." It also called on the firm to allow for redemptions of GBTC.

In a statement shared with Bloomberg on Tuesday, the firm said that Grayscale should conduct a tender offer for shares in GBTC. Grayscale would need approval from shareholders to allow for such an offering.

Long-term product structure

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A Grayscale spokeswoman said the firm is "pleased to resolve Fir Tree Partners’ meritless lawsuit."

"It’s widely understood that the conversion of GBTC to an ETF is the best long-term product structure for all investors. At Grayscale, we are 100% committed to that endeavor, and look forward to the Court’s decision on the matter by the Fall of 2023," the spokeswoman said in an emailed statement. 

Grayscale is also suing the U.S. Securities and Exchange Commission to pave the way for the agency to greenlight its proposal to upgrade GBTC to an exchange-traded fund.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].
Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.

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