Alameda Files Lawsuit Against Grayscale: Unveiling the Inside Story of $9 Billion in Frozen Assets

A big scoop has emerged in the crypto world. The turmoil of the FTX bankruptcy case is not over yet, and now it's Alameda's turn to go to court against Grayscale.

Event Summary

According to the litigation records of the Delaware Court of Chancery, the new CEO of FTX, John J. Ray III, has filed a lawsuit on behalf of Alameda Research against Grayscale Investments and its parent company Digital Currency Group (DCG). The lawsuit is aimed directly at Grayscale CEO Michael Sonnenshein.

Key numbers look here:

• Litigation Claim Amount: $9 billion or more
• Management fees charged by Grayscale: Over $1.3 billion
• Trust Share Discount Rate: The trading price has fallen by about 50% compared to the net asset value.
• Additional assets that FTX creditors may receive: $250 million

Where is the problem?

Alameda's lawsuit documents accuse Grayscale of two major charges:

1. Excessive fees violate trust agreements: Grayscale has extracted over $1.3 billion in management fees from the Bitcoin Trust and Ethereum Trust, actions that violate the terms of the original trust agreements.

2. Creating false excuses to refuse redemption: Grayscale prohibits investors from redeeming shares with various “excuses” (in the words of the FTX CEO, “deliberately fabricated reasons”), resulting in the trust shares being severely undervalued in the secondary market.

Why is Alameda taking action now?

To understand the logic of this lawsuit, we must start with the bankruptcy liquidation of FTX. When FTX collapsed in November 2022, it was discovered that Alameda had engaged in large-scale improper lending using customer funds. Now, the bankruptcy administrator Ray is “turning over every stone” to find all possible assets to return to the creditors.

This investment in Grayscale just happened to be his goal – if he can unfreeze the $9 billion, Alameda's initial investment of approximately $550 million could increase by 90%. This means that FTX's creditors and customers could receive an additional $250 million in compensation.

Grayscale's Response

The spokesperson for Grayscale stated that the lawsuit is “completely misguided” and claimed that the company has been transparently advancing the regulatory application to convert GBTC into an exchange-traded fund (ETF) - this transition is the best option for Grayscale investors.

Implied meaning: Your lawsuit is not valid, and we are legally resolving these issues.

Follow-up Highlights

This is not the first time Alameda has used litigation to “make money”. At the end of January, it just sought to recover $445.8 million from the bankrupt Voyager Digital. The question now is:

• Will Grayscale be forced to lift the redemption ban?
• What impact will this have on the price of GBTC?
• Will other investors of frozen assets also face similar lawsuits?

This legal battle has just begun, but for those investors who are “trapped” in the Grayscale Trust, this could be a turning point.