What Grayscale’s CEO feels about the SEC lawsuit
On 24 February, Michael Sonnenshein, the CEO of Grayscale Investments, appeared in an interview on “What Bitcoin Did.” The hour-long interview saw Sonnenshein discuss various matters related to his company, especially its lawsuit against the U.S. Securities and Exchange Commission, which started in June 2022.
According to Sonnenshein, when Grayscale started with the Grayscale Bitcoin Trust (GBTC), the objective from day one was to convert the fund into a spot Bitcoin exchange traded fund (ETF). The fund’s legal structure was created in a way that would ensure the smooth transition into an ETF when the time was right.
Speaking on the importance of the ETF, Michael explained that the current 45% discount to its net asset value could be avoided if it was an ETF because ETFs have an inbuilt arbitrage mechanism that ensures that the share price remains in line with the underlying asset. He acknowledged that his firm and investors alike were frustrated about GBTC’s press time price.
However, the securities regulator rejected Grayscale’s application to convert GBTC to a spot Bitcoin ETF in mid 2022, which led to the lawsuit as a last-ditch attempt in the interest of their investors. As for the grounds for the litigation against the SEC, the CEO stated that when a federal agency like the SEC treats two similar issues in a different and arbitrary manner; it violates the U.S. administrative procedures act. He cited the approval of the BTC futures ETF and denial of the spot BTC ETF to make his case.
Sonnenshein explained:
“We have now over a million investor accounts that own GBTC, (from) all 50 states, GBTC investors all over the world, that are counting on us to do the right thing for them.”
He further indicated that if
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