Asset managers Osprey Funds and Grayscale Investments agreed to settle a lawsuit over alleged violations of Connecticut law in the advertising and promotion of Grayscale’s Bitcoin exchange-traded fund (ETF).
“Soon after this appeal was filed, the parties reached a settlement of this case,” the motion stated. “It is expected that all these tasks can be done within 45 days, and it is uncertain whether a shorter extension would suffice.”
Details of the settlement have not been made public.
The legal battle between the two firms started on Jan. 30, 2023, when Osprey
Osprey claimed Grayscale promoted its Grayscale Bitcoin Trust (GBTC) as a means to access a spot Bitcoin ETF through a conversion. Osprey argued that the conversion was presented as a certainty, despite regulatory uncertainty at the time.
Grayscale’s application to
An August 2023 ruling compelled the SEC to reconsider its rejection of Grayscale’s application to convert the fund into an ETF.
The SEC’s approval allowed GBTC to transition into a spot ETF and begin trading on the NYSE Arca exchange.
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On Feb. 7, Judge Mark Gould sided with Grayscale, ruling that Osprey’s claims against the asset manager were exempted from the Connecticut Unfair Trade Practices Act.
Osprey responded by filing a motion for reargument on Feb. 10. The fund claimed that Gould’s ruling came “before the close of discovery,” which is the formal evidence-gathering phase of a lawsuit.
The fund claimed that the ruling overlooked the differences between how the Federal Trade Commission and Connecticut courts treat deceptive advertising.
The settlement ended one of the more prominent legal clashes among crypto asset managers competing for early ETF dominance. Grayscale’s GBTC remains one of the largest Bitcoin investment vehicles in the United States.
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