The concerns of crypto investors seem to be growing around Grayscale’s GBTC product. Because these products are trading at a substantial discount to its net underlying asset value. It must be noted that the discount between GBTC and the net asset value (NAV) of Grayscale’s Bitcoin holdings widens to approximately 46%.
The substantial discount also pointed towards the investigation on Grayscale’s mismanagement of its customer funds. Fir Tree Capital Management, an investment firm, demands the Delaware Chancery Court to do the investigation over Grayscale’s management process.
However, the other investors call for more drastic investor compensation and decline in fees as Grayscale is working to convert GBTC to an ETF.
Concluding such facts, the investors in Grayscale’s Bitcoin Trust now worry that the company’s closed-ended product will harm clients. They also have requested the digital asset manager to offer lower administration fees and also allow customers to redeem GBTC shares.
Fir Tree Capital Management Sues Grayscale
According to the Bloomberg report on Dec. 7, 2022, Fir Tree is suing Grayscale for information to investigate potential mismanagement and conflicts of interest at its $10.7 Billion Bitcoin fund.
“In 2013, we launched Grayscale Bitcoin Trust (GBTC) to provide investors with access to Bitcoin, and always with the intention of converting it to an ETF when permitted by US regulators,” a Grayscale spokesperson said in an emailed statement. “We remain 100% committed to converting GBTC to an ETF, as we strongly believe this is the best long-term product structure for GBTC and its shareholders.”
Additionally, “Fir Tree said it wants Grayscale to stop its efforts to convert the trust into an exchange-traded fund, which Grayscale claims is the only way it can legally redeem shares.”
Grayscale and its Bitcoin Holding
Moreover, a twitter account named “whalechart.org” that has around 211K followers wrote in its recent tweet that “Grayscale who holds about 635,000 BTC might fall, and the Bitcoin price will face a massive capitulation.”
It also added “Grayscale going bankrupt would mean Bitcoin below $5000,” in another tweet.
The CEO of Grayscale, Michael Sonnenshein, initiated an attempt to assuage fears of Grayscale Bitcoin Trust’s investors after the collapse of FTX. The company said “it would explore new options to return a portion of GBTC’s capital to shareholders if it fails to transform the world’s largest bitcoin fund into an exchange-traded fund,” according to the Wall Street Journal’s report.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2022/12/27/investors-are-concerning-towards-gbtc-product-does-it-need-any-investigation/