Grayscale Sues United States SEC Over Bitcoin ETF Application Rejection
- However, Grayscale CEO, Michael Sonnenshein, hinted that the firm supports and believes in the resolve of the SEC to safeguard investors, and sustain fairness, stable, and efficient markets.
Following the SEC’s rejection of an application to convert the flagship Grayscale Bitcoin Trust product to an Exchange-Traded Fund (ETF), the largest digital currency asset manager, Grayscale has launched a legal tussle against the regulatory body. According to reports, Grayscale had earlier requested the approval of the U.S regulator to change its BTP to ETH. However, on Wednesday, the Securities and Exchange Commission dismissed the application.
SEC claims the application for such conversion creates suspicion and question about possible market manipulation. According to the regulator, the investment manager, which manages the world’s largest bitcoin fund failed to provide a convincing argument against questions suggesting a potential market manipulation with such a proposal.
More so, the agency claimed the Grayscale proposal, if approved, tends to jeopardize the protection availed to investors.
SEC’s Decision to Welcomed by Grayscale
According to findings, the investment manager had since 2021 relayed the proposal to the U.S regulator. Afterward, the agency simultaneously carried out a potential market manipulation test on the proposal, a development that delayed its final decision on it. Grayscale, having noticed the resolve by the regulator to fully checkmate the potential of the proposal, gathered people to email their support to the proposal.
Now, the SEC decided to reject the proposal, claiming it tends to make market manipulation very possible. As a response to the ruling by the agency, the world’s largest bitcoin fund investment firm launched a petition with the U.S Court of Appeals in the Columbia Circuit District.
Grayscale in the filing challenged the decision of the regulator to reject its proposed change from Bitcoin-Traded Product to Exchange-Traded Fund. As discovered, the firm mandated its senior legal luminary and a former U.S solicitor general, Verrilli Don to lead the legal battle against the agency.
Notably, the company also hired a team of attorneys at the law firm Davis Polk & Wardwell to work with Verrilli in proving its case. As observed in the filing, the firm is asking the Court to revoke the rejection of its proposal by the SEC
Verrilli was quoted condemning SEC for allegedly failing to apply consistent treatment to similar investment vehicles. The legal luminary claims the agency acted arbitrarily by rejecting the proposal by Grayscale.
According to him, such a move amounts to an outright violation of the administrative procedure act and securities exchange act of 1934.
Grayscale CEO, Michael Sonnenshein, hinted that the firm supports and believes in the resolve of the SEC to safeguard investors, and sustain fairness, stable, and efficient markets. Sonnenshein, however, expressed his disappointment in the agency for disapproving the proposal for a change to the ETF. He vehemently disagreed with the decision of the agency to disallow the introduction of the ETF in the U.S market.
As of Press time, the agency is yet to react to the legal tussle filed by Grayscale.
However, till the late hours of Wednesday, Bitcoin was trading at $22,999.53 down approximately 1 percent in the last 24 hours.