Grayscale, the platform that is responsible for managing the biggest BTC fund across the globe, stated that the Securities and Exchange Commission (SEC) of the United States would be sued on its behalf following the agency’s refusal for its bid to transform the investment vehicle thereof into an and exchange-traded fund (ETF).
SEC Castoffs Grayscale’s ETF Application
On Wednesday, the SEC discarded the application of Grayscale to launch an ETF, referring to the investment manager’s failure to respond to the queries related to the concerns dealing with market manipulation. The watchdog is of the view that the investors would apprehensively lack adequate protections under the proposal of Grayscale. An application was submitted on the behalf of Grayscale to establish its ETF called Bitcoin Trust – also known as GBTC – in October of the previous year, however, the ruling thereof underwent several delays.
After that, Grayscale put a lot of pressure on the securities regulator to give its consent, by inviting people to rapidly express support in its favor. Shortly following the rejection by the SEC, a petition was filed by Grayscale confronting the decision of the watchdog with the United States-based Court of Appeals for the District of Columbia Circuit. Donald B. Verrilli Jr. – the senior legal planner of Grayscale who has formerly been operating as the solicitor general of the United States – as well as an attorneys’ group at Davis Polk & Wardwell (a law company).
Grayscale Files a Legal Case against the SEC, Accusing It of Inconsistent Treatment
It was stated by Verrilli that the Securities and Exchange Commission is unsuccessful in consistently treating the other such investment vehicles, and thus is acting capriciously and arbitrarily in surpassing the Securities Exchange Act as well as the Administrative Procedure Act of 1934. The Securities and Exchange Commission did not instantly respond other than the normal working hours within the United States.
According to the argument of Grayscale, the SEC’s way of proceeding is not consistent as shown in its former decisions – providing a green light to the rest of the ETFs based on Bitcoin such as those built on futures markets as well as one by which the investors are permitted to bet against the crypto. The bulls in the crypto market had been hopeful that the SEC would sanction approval for the initial spot BTC exchange-traded fund, a step by which crypto would be opened to a further level in the case of organizational investment.
The decision to refuse the application of Grayscale for Bitcoin ETF is another instance in a series of negative reports revolving around the crypto sector for a considerable period. In the previous days of this week, Three Arrows Capital (a notorious hedge fund of cryptocurrencies crashed into liquidation. Another Example of the plagues targeting the crypto space is the historical collapse of Terra (LUNA).
In the late hours of Wednesday, the primary crypto asset (Bitcoin) was trading at up to $20,085 – at 1% lower than where it was trading 24 hours ago. A cumulative amount of nearly $2T has been lost by the cryptocurrencies in market value after 2021’s November bubble up till now.