Grayscale is Suing the SEC Over Bitcoin ETF Application Rejection

Dejan Cvetnarevic
Dejan Cvetnarevic

Updated · Jun 30, 2022

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After the SEC rejected its application on Wednesday, Grayscale announced it is responding with legal actions.

Responding with a Lawsuit

Grayscale Investments applied to convert its Grayscale Bitcoin Trust, GBTC, to an ETF, but the US Securities and Exchange Commission rejected it. Its reasoning pointed to concerns over market manipulation, a lack of surveillance-sharing agreement between a regulated market and a regulated exchange, and the role of Tether in the Bitcoin ecosystem.

Now the digital currency investing leader is responding with a lawsuit. The company’s CEO Michael Sonnenshein took to Twitter to announce Grayscale’s next move. 

“We are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the US market,” Sonnenshein said in a press release on Wednesday.

He argues that the SEC has to allow products similar to those already trading, referring to Bitcoin futures ETFs.

This comes only about a week after he sent investors a letter signaling optimism about the SEC’s impending decision.

To date, only some of these assets have been approved for trading. Futures-based ETFs trade based on the value of the CME’s Bitcoin futures products, while Spot Bitcoin ETFs trade on Bitcoin’s own price.

The move to reject Grayscale’s application adds to the negative news surrounding crypto lately.

Bitcoin was already experiencing its lowest levels this year, and the digital asset continued to tank even further. Earlier this month, crypto lending giant Celsius paused all withdrawals, transfers, and swaps.

It is estimated that cryptocurrencies have lost a combined sum of $2 trillion in market value since November 2021.

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Dejan Cvetnarevic

Dejan Cvetnarevic

Dejan is a techie at heart who always dreamed of turning his fascination with gaming into a career. He finds working for TechJury a perfect opportunity to express his views of all kinds of different software. Being an avid reader, particularly of fantasy and sci-fi, Dejan pursued a degree in English Language and Literature. When not at his computer, he’s watching sports or playing tabletop games.

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