Crypto investment firm 3iQ adds support for grayscale combining of fir trees

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(Bloomberg) – Crypto investment fund manager 3iQ is adding a voice of support to Fir Tree Capital Managements lawsuit centered on Grayscale Investments Bitcoin trust, becoming the latest firm to publicly voice concern over the attacked product.

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The Toronto-based firm’s decision follows news in early December that Fir Tree is suing Grayscale Investments for information to investigate potential mismanagement and conflicts of interest regarding its Bitcoin investment product. $10.6 billion known as GBTC. The trust is trading at a nearly 50% discount to its underlying holdings, which 3iQ says is seeking to remedy in hopes of restoring value and investor confidence at a time when both are sorely needed. .

Grayscale has limited shareholder rights over time, 3iQ said in a statement Thursday, adding that prior to the Fir Trees filing, it engaged parent GBTC with suggestions on how to reduce the rebate on the Bitcoin trust. , but in vain.

GBTC was widely used by investors as a way to bet on Bitcoin, making it a key facet of the market and for a time a profitable trade when priced at a premium to the tokens it held. But unlike an exchange-traded fund, the trust cannot redeem shares to keep pace with cooling demand. So now with the inverted market price, among other factors, it is trading at a discount to its underlying holdings, which has widened to record highs in recent weeks as it sells to a greater degree higher than the token itself.

Grayscale wants to convert GBTC into a physically backed Bitcoin ETF, a move the U.S. Securities and Exchange Commission rejected in June; Yet the company has repeatedly said it still hopes the conversion will be completed. Fir Tree wants to push Grayscale to erase the discount by lowering fees and resuming redemptions, Bloomberg News reported.

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Grayscale said earlier this week that it was considering appealing to US regulators to allow it to buy back shares of the Bitcoin Trust, a process that would involve the company asking shareholders to sell back their GBTC shares at an agreed price.

In Thursday’s release, 3iQ said it encourages Grayscale to offer conversion functionality for GBTC that enables the physical movement of Bitcoin to one of our current solutions. This would minimize the market impact of an immediate, large-scale takeover without burdening the courts or the taxpayer.

As a registered digital asset manager, 3iQ appreciates and understands the need to restore trust among institutions and investors who believed GBTC was a long-term, profitable and secure, physically backed investment vehicle, 3iQs said. . Grayscale did not respond to our outreach, however, 3iQ is now calling on our customers, supporters and peers in the regulated investment community to join this broader call. Together, we can help fix the GBTC downgrade and restore value and investor confidence.

–With help from Katherine Burton and Katie Greifeld.

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