Grayscale wins legal battle against SEC
Date: 2023-08-29 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
In a landmark ruling dated August 29, 2023, the U.S. Court of Appeals for the District of Columbia Circuit overturned an order from the Securities and Exchange Commission (SEC), giving Grayscale Investments LLC a coveted victory in its legal battle to transform its Bitcoin Trust into a bitcoin cellular exchange-traded fund.
On June 29, 2022, the SEC sent a rejection to convert the Grayscale Bitcoin Trust to a cellular bitcoin ETF to the first application from the company, stemming from the original plans for the change. Grayscale argued that the SEC acted "arbitrarily and capriciously" in denying applications for cellular bitcoin ETFs, especially given that. Grayscale believed that the SEC violated the Securities and Exchange Act. The reason for this was the discrimination of cellular issuers of bitcoin-ETF by her company.
On the news, Bitcoin (BTC) surged 6% before dropping slightly to 5%.
Larger consequences
This decision is not only a significant victory for Grayscale, but also has profound implications for the future. These results are expected to be similarly named future bitcoin-ETF cellular applications. The lawsuit may affect the fate of a number of cellular applications for bitcoin ETFs that have been filed this year.
Grayscale's argument centered around the SEC's unequal treatment of cellular and futures bitcoin ETFs, despite the fact that both present similar risks when valued using the same underlying markets. The SEC argues that cell bitcoin ETFs are more susceptible to manipulation and fraud because the underlying market is unregulated. The SEC has said that the regulated Chicago Mercantile Exchange with bitcoin futures ETFs has sufficient safeguards against fraud and manipulation.
In response to the court ruling, Grayscale CEO Michael Sonnenschein thanked the firm's investors for their support and encouragement through tweets. He also pointed out that the Grayscale legal team is very diligent in studying the opinion of the court.
Accepting the court's decision, regardless of the outcome, was decisive for all those who dreamed of issuing a cellular bitcoin ETF in the United States. In the event Grayscale lost, the firm had the opportunity to hold an en banc hearing where all the D.C. judges would give their opinion on the case. Alternatively, they could appeal the decision to the Supreme Court. Later, when the decision in favor of Grayscale is made by the firm and becomes a victory for them, the future of US cellular Bitcoin ETF issuers may have just brightened up.
