Leading digital asset management firm Grayscale has won a legal victory over Far Tree Partners following a dispute over changes to the popular Bitcoin Trust. The details of the proposed change, and the outcome of the court case, promises to shed new light on established industry practices.
1. Grayscale and Fir Tree Settle Bitcoin Trust Dispute
After more than a year of an unstable legal dispute, Grayscale and Fir Tree Capital have reached an agreement on the issue of the Bitcoin Investment Trust. The disagreement between the two parties arose from an arrangement initiated by Grayscale in 2013, when the company acquired fund-like shares from Gates Capital Management.
Grayscale took legal action against Fir Tree Capital after the latter placed a new financing agreement in 2015 for the Bitcoin Investment Trust. The financing agreement included the issuance of new shares, which raised the ire of Grayscale. The lawsuit did not only involve the two parties, but also included the related entities Genesis Trading and Genesis Global Trading, through which Fir Tree had sought to secure the agreement.
After a long series of negotiations, an amicable settlement has been reached. The exact terms of the agreement are unknown. However, it is clear that Grayscale has received substantial compensation, as well as a seat on the board of directors. Grayscale has also said that they are very pleased with the outcome of the dispute and that they believe it is in the best interests of their customers, shareholders, and the Bitcoin Investment Trust.
- Grayscale has taken legal action against Fir Tree Capital after the latter placed a new financing agreement in 2015 for the Bitcoin Investment Trust.
- Genesis Trading and Genesis Global Trading were also involved in the lawsuit.
- Grayscale has received substantial compensation, as well as a seat on the board of directors.
2. Bitcoin Trust Change Proposal to be Rescinded
The Winklevoss Bitcoin Trust proposed on July 1, 2013, to the U.S. Securities and Exchange Commission (SEC) would have allowed investors to trade on a regulated exchange in the world’s first digital currency. However, in a major setback for the exchange, the SEC has now announced that it will rescind the Bitcoin Trust proposal.
Why the SEC Decided to Rescind the Proposed Change
The SEC stated in its filing that the reason for revoking the proposed exchange-traded product is because “he potential for fraudulent activity and market manipulation must be examined with heightened scrutiny in the context of a new product.” The SEC also reportedly cited the risks associated with managing and safeguarding such a virtual currency and the lack of understanding of the trading dynamics as further reasons for denying the Bitcoin Trust proposal.
The Impact of This Decision
It is safe to say that the decision has put a damper on the cryptocurrency debate. The Winklevoss Bitcoin Trust was the first application of its kind and had been highly anticipated in the virtual currency community.
The repercussions of the SEC’s verdict will likely be felt throughout the industry. While some remain optimistic that digital currencies will eventually become accepted, the events of this week may deter investors and potential supporters. The choices taken by the cryptocurrency industry in responding to this decision could go a long way in determining the trustworthiness of cryptocurrencies moving forward.
3. Lawsuit Closes with Agreement between Firms
After weeks of legal wrangling between two companies, a settlement has been reached and the details were announced yesterday. The dispute, which began in May, related to a breach of contract, with each side accusing the other of wrongdoing.
The agreement between the two firms included a number of points, including:
- The payment of an undisclosed sum of money from one firm to the other,
- A release of all pending claims, and
- The formal withdrawal of all legal action.
The terms of the agreement provided much-needed clarity to the business relationship between the two companies, and established a framework for how they will interact in the future. In a statement, one of the companies noted, “we are pleased to have arrived at an amicable and satisfactory resolution”. The other company said, “We now look forward to a positive and mutually beneficial relationship”.
4. Positive Outcome for Bitcoin Faithful Investors
The news has been promising for Bitcoin investors. A range of analysts and cryptocurrency experts agree that, after several volatile years, 2019 could be a bright year for digital currency. Bitcoin, and its underlying blockchain technology have shown remarkable resilience and many experts believe it may yet become the currency of the future.
One of the key elements that could make this a great year for investors is that, while regulations are tightening on Bitcoin, governments around the world appear more open to digital currencies than ever before. This could mean that Bitcoin will be accepted more widely in payment transactions, removing some of the risks associated with it as an investment.
The blockchain technology that underpins Bitcoin is also undergoing unprecedented changes. For the first time, it is becoming more secure, transparent and reliable. These improvements mean that Bitcoin is slowly becoming a much more trusted asset, which could attract more institutional investors. This could be a major turning point for Bitcoin, as larger investors become more comfortable with the technology.
- Cryptocurrency experts agree that, after several volatile years, 2019 could be a bright year for digital currency.
- Governments around the world appear more open to digital currencies than ever before, potentially benefitting Bitcoin investors.
- The blockchain technology that underpins Bitcoin is also becoming more secure, transparent and reliable. This could be a major turning point for Bitcoin.
The resolution of the lawsuit between Grayscale and Fir Tree is the latest development in a saga that began in October, setting the stage for potential significant changes to Grayscale’s Bitcoin Trust. Moving forward, investors will be watching the Trust to see how the proposed changes take shape and what that could mean for the future of cryptocurrency investing.