Asset management companies Osprey Funds and Grayscale Investments have consented to resolve a lawsuit regarding purported breaches of Connecticut law in the marketing and promotion of Grayscale’s Bitcoin exchange-traded fund (ETF).
As per an April 9 court submission, the parties have opted to settle the two-year-long case and are currently finalizing the necessary documentation and terms of the settlement. The submission indicated that once these processes are concluded, Osprey will retract its appeal.
“Shortly after this appeal was lodged, the parties arrived at a settlement of this matter,” the motion expressed. “It is anticipated that all these tasks can be accomplished within 45 days, and it remains uncertain if a shorter extension would be adequate.”
The particulars of the settlement have not been disclosed to the public.
Grayscale and Osprey finalize settlement
The legal dispute between these two companies commenced on Jan. 30, 2023, when Osprey initiated a lawsuit in the Connecticut Superior Court. Osprey contended it was Grayscale’s sole rival in the over-the-counter Bitcoin (BTC) trust market and accused Grayscale of retaining its market share through dishonesty.
Osprey asserted that Grayscale marketed its Grayscale Bitcoin Trust (GBTC) as a method to access a spot Bitcoin ETF via a transformation. Osprey argued that the transformation was portrayed as a certainty, despite the regulatory ambiguity present at that time.
Grayscale’s petition to convert GBTC into a spot ETF was sanctioned by the US Securities and Exchange Commission in January 2024.
An August 2023 verdict compelled the SEC to reevaluate its denial of Grayscale’s request to change the fund into an ETF.
The SEC’s endorsement permitted GBTC to shift into a spot ETF and commence trading on the NYSE Arca exchange.
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Settlement follows Osprey’s appeal
On Feb. 7, Judge Mark Gould ruled in favor of Grayscale, asserting that Osprey’s allegations against the asset manager were exempt from the Connecticut Unfair Trade Practices Act.
In response, Osprey filed a motion for reargument on Feb. 10. The fund argued that Gould’s decision was made “prior to the conclusion of discovery,” which is the formal phase of evidence collection in a lawsuit.
The fund maintained that the ruling failed to recognize the distinctions between how the Federal Trade Commission and Connecticut courts address misleading advertising.
The settlement brought closure to one of the more significant legal confrontations among crypto asset managers vying for dominance in early ETF offerings. Grayscale’s GBTC continues to be one of the largest Bitcoin investment instruments in the United States.
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