On June 29, Donald B. Verrilli Jr., a partner at Munger, Tolles & Olson, filed a petition for review of the SEC’s ruling with the United States Court of Appeals for the District of Columbia Circuit on behalf of Grayscale. In its Oct. 11 opening brief, Grayscale argued that the SEC had arbitrarily treated a proposed spot bitcoin ETP differently from the way it treats bitcoin futures ETPs.
Judge Neomi Rao, part of a three-judge panel that heard oral arguments in the case Tuesday, asked Emily True Parise, senior appellate counsel for the SEC, if the court agreed with Grayscale would the SEC approve a spotbit bitcoin product or would it go back on the approval of the futures product.
Parise replied that she was not in a position to speak to what the commission would do.
Earlier in the proceedings, Judge Rao asked about an SEC order related to the Teucrium Bitcoin Futures Fund.
“What about the fact that in the Teucrium order the commission recognizes that futures prices are affected by spot prices,” Justice Rao asked, adding that the commission concluded in approving futures ETPs that any fraud in the spot market could be adequately addressed by the fact that the futures market is regulated. That was a conclusion the SEC drew just a few months before it denied the spot bitcoin ETP, she said.
Parise said she didn’t think that was quite what the SEC concluded in the Teucrium order.
She pointed to the relationship in the Teucrium situation between the underlying futures market and the regulated market with which the exchange had a monitoring sharing agreement.
Separately, Alameda Research filed a lawsuit Monday against Grayscale Investments and other defendants in the Delaware Court of Chancery.
“This action arises out of the defendants’ brazen abuse of their control over nearly $19 billion of digital assets held in two trusts to enrich themselves at the expense of trust shareholders,” Alameda’s complaint alleges.
Alameda is a shareholder in both trusts, the complaint states. Although Alameda was previously part of the hedge fund and cryptocurrency trading business run by Sam Bankman-Fried, Alameda is now a debtor-in-possession that has filed for Chapter 11 relief of the U.S. Bankruptcy Code, the filing said.
In addition to Grayscale, Alameda’s complaint also named Grayscale CEO Michael Sonnenshein, Digital Currency Group and Barry Silbert as defendants. Mr. Silbert is the founder and CEO of DCG, Grayscale’s parent company, the complaint said.
