Grayscale and Fir Tree agree to resolve lawsuit over bitcoin trust

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

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.