U.S. Congressman Brad Sherman questioned the Securities and Alternate Fee (SEC) about whether or not Grayscale Bitcoin Belief buyers (GBTC) can redeem their belongings from the funding firm.
In a Could 11 letter directed to the SEC Chair Gary Gensler, the Congressman claimed that Grayscale prioritized earnings no matter the way it affected over 850,000 retail buyers whose belongings are at present trapped in GBTC.
“Grayscale marketed itself as a manner for retail buyers to spend money on bitcoin and share in its monetary progress with out worrying in regards to the security and storage difficulties that include proudly owning cryptocurrencies straight.”
In keeping with the Congressman, Grayscale’s resolution to situation extra GBTC shares performed a major function within the shares buying and selling at over 40% low cost to its internet asset worth. The low cost has narrowed to 39.76% as of press time, in accordance with ycharts information.
Sherman noted that these actions created considerations for hundreds of GBTC buyers, including that an SEC intervention was needed for investor safety.
In the meantime, Grayscale had denied buyers’ request for it to permit redemptions, citing Regulation M. The rule prohibits corporations from simultaneous gross sales and redemption of the identical safety.
Sherman posed a number of inquiries to the SEC about Regulation M and whether or not it was nonetheless a barrier to shareholder redemptions. His different questions bordered on Grayscale’s lack of an impartial director on its board and whether or not its 2% Bitcoin-based payment was excessive.
The lawmaker requested that the monetary regulator reply these questions earlier than Could 15.
Group welcomes intervention
The letter generated blended opinions from the crypto neighborhood, with some describing it as a welcome improvement. Nonetheless, a number of others criticized Sherman and thought of the letter one other signal of FUD — citing his earlier anti-crypto posture.
The lawmaker had beforehand described Bitcoin holders as tax evaders and has maintained a powerful anti-crypto rhetoric in his interventions in regards to the area.
In the meantime, the letter presents one other headache for Grayscale. The agency is battling the SEC over its refusal to approve the conversion of its BTC belief right into a spot ETF.
Moreover that, its mum or dad firm Digital Forex Group is in a monetary mess attributable to one among its subsidiaries — Genesis — which filed for chapter on Jan. 19.
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