A digital asset management company, was involved in a dispute with the united states securities and exchange commission (sec) regarding the approval of its spot market bitcoin exchange traded fund (etf). grayscale argued that the sec’s refusal to approve its etf was “arbitrary and capricious,” and that the regulator’s arguments were “inconsistent and inadequate.” the sec is scheduled to issue its final brief on the matter on february 3.
Dispute between grayscale and the sec has been ongoing for some time now. grayscale has also been facing pressure from investors due to the discount between gbtc and bitcoin, and was sued by hedge fund fir tree capital for potential mismanagement and conflicts of interest. in response, grayscale’s ceo michael sonnenshein proposed a tender offer of 20% of the outstanding shares, which requires approval from the sec.
Argued that the exchange’s surveillance-sharing agreement with the cme provides adequate protection against fraud and manipulation in the bitcoin futures market, but not in the spot bitcoin market. they also argued that any fraud committed in the spot bitcoin market would necessarily affect the price of bitcoin futures. grayscale slammed the sec’s previous brief, claiming that the regulator’s “central premise is illogical,” and that there is no reasonable basis to conclude that cme surveillance adequately protects holders of one kind of etp but not the other. the sec has already allowed several bitcoin etfs to launch based on futures contracts, thus grayscale argued that the sec’s refusal to approve the gbtc’s spot market etf was illogical.