Alameda Research, an affiliate of FTX, filed a lawsuit against asset manager Grayscale Investments on March 6, 2023. In the Alameda Research suit against Grayscale, the FTX affiliate contends that Grayscale imposed a “redemption ban,” leading to the loss of customer cash.
According to a statement, Alameda stated on Monday that Grayscale’s fee system and refusal to permit its shareholders to redeem shares in its trust products had decreased the worth of Alameda’s shares by 90%. The case was submitted to the Court of Chancery in Delaware, a non-jury trial court mainly dealing with trust and property litigation.
Alameda Research’s Lawsuit Against Grayscale
Alameda Research claims that Grayscale’s actions improperly and unjustly affected customers of the bankrupt digital-asset exchange FTX. According to Alameda, it’s seeking injunctive relief that can release $9 billion or more for its shareholders of the trusts.
“We will continue to use every tool we can to maximize recoveries for FTX customers and creditors. Our goal is to unlock value that we believe is currently being suppressed by Grayscale’s self-dealing and improper redemption ban. FTX customers and creditors will benefit from additional recoveries, along with other Grayscale Trust investors that are being harmed by Grayscale’s actions.”
John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors [1]
In addition to the Alameda lawsuit against Grayscale, Alameda Research is suing Digital Currency Group, its founder Barry Silbert, and CEO Michael Sonnenshein.
The case highlights the ongoing legal challenges facing the rapidly evolving cryptocurrency sector as investors and stakeholders navigate the complex regulatory landscape. Moreover, it shows the cryptocurrency industry is more intertwined than many think.
Despite the challenges, many in the cryptocurrency market remain optimistic about its potential to disrupt traditional financial systems and usher in a new era of digital finance. As the legal battles continue to unfold, it remains to be seen how this fast-growing sector will ultimately shape the future of finance.
