Grayscale Investments, a prominent crypto asset management company, has achieved a significant legal triumph in its ongoing battle with the United States Securities and Exchange Commission (SEC). The dispute revolves around Grayscale’s efforts to convert its Grayscale Bitcoin Trust (GBTC) into a publicly traded Bitcoin exchange-traded fund (ETF). The SEC’s prior rejection of Grayscale’s GBTC application, citing concerns related to the prevention of fraudulent and manipulative activities, has been overturned by an appeals court, which characterized the SEC’s decision as “arbitrary and capricious.”

In a court filing dated August 29, U.S. Court of Appeals Circuit Judge Neomi Rao granted Grayscale’s petition for review and vacated the SEC’s order denying the GBTC listing application. Although this marks a significant milestone, it does not guarantee the immediate listing of a Grayscale spot Bitcoin ETF.

Michael Sonnenshein, the CEO of Grayscale, took to the social media platform X (formerly Twitter) to announce that the legal team is “actively reviewing” the court’s opinion. The legal dispute traces back to June 29, 2022, when the SEC rejected Grayscale’s application to convert GBTC into a spot ETF. The very next day, Grayscale’s senior legal strategist, former U.S. Solicitor General Donald B. Verrilli Jr., filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit. At the time, Sonnenshein expressed profound disappointment with the SEC’s decision and strongly disagreed with the outcome.

🚨 JUST IN 🚨

The D.C. Circuit ruled in favor of @Grayscale in our lawsuit challenging the SEC's decision to deny $GBTC's conversion to an ETF!

Thank you to everyone who has been on this journey with us, especially our investors. We are grateful for your support and…

— Sonnenshein (@Sonnenshein) August 29, 2023

Grayscale Bitcoin Trust stands as one of the largest Bitcoin funds traded over-the-counter, boasting assets under management exceeding $14 billion. Earlier this year, GBTC shares experienced nearly a 50% discount to the net asset value, primarily due to ongoing litigation with the SEC and credit concerns associated with its parent company, Digital Currency Group (DCG).

The year 2022 witnessed a series of significant developments for Grayscale. In October, the company terminated substantial agreements with its partner and digital currency broker, Genesis Global. Subsequently, on November 16, 2022, Genesis Global halted withdrawals, citing market turmoil linked to the collapse of cryptocurrency exchange FTX. Additionally, the company faced the repercussions of the downfall of the Singaporean crypto hedge fund Three Arrows Capital, resulting in a lingering $1.2 billion debt owed to Genesis.

As of January 2023, it was disclosed that DCG had accrued liabilities exceeding $3 billion and was contemplating a $500 million sale of its venture capital portfolio. In parallel, Genesis Global was burdened with a debt of $900 million, exclusively owed to users of the cryptocurrency exchange Gemini’s Earn program.

Disclaimer: This article is based on information available as of August 29, 2023. It is intended for informational purposes only and should not be regarded as legal, financial, or investment advice. Readers are encouraged to conduct their research and seek guidance from legal and financial experts regarding any matters related to cryptocurrencies, investments, or regulatory issues.

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