There is a lawsuit ongoing between Alameda Research and Grayscale, filed by the former for unlocking investments worth billions of dollars from two trusts belonging to the latter.
However, FTX’s sister trading company said that it now requires more time in the said lawsuit for assembling co-plaintiffs.
More time
Grayscale had filed a motion for the lawsuit’s dismissal and Alameda requested more time until September 15th to respond to it.
According to a court filing, Grayscale has no issues with the extension required. Alameda stated that a co-plaintiff it required for proceeding with the case had backed out.
The plaintiffs said that the co-plaintiff was not willing to join the litigation at this point and they had not disclosed as to why they had decided to back down.
Alameda will be able to put together ‘sufficient shares’ in two of the trusts owned by Grayscale with the time it has been given to put together more plaintiffs.
In order to file a derivative lawsuit, plaintiffs have to have at least 10% outstanding shares. This is mentioned in the agreement for the Grayscale Bitcoin Trust (GBTC).
The lawsuit
The lawsuit was filed by Alameda back in March against Grayscale, along with Digital Currency Group (DCG), which is the former’s parent company.
In fact, claims were also made against the CEO of DCG, Barry Silbert, and Michael Sonnenshein, Grayscale’s CEO.
Filed in Delaware’s Court of Chancery, the lawsuit claimed that creditors and debtors of FTX were unable to realize about $250 million because of the ‘redemption ban’ on the Ethereum and Bitcoin Trusts of Grayscale.
FTX issued a press release in which it said that if a redemption plan is instituted for both trusts and their associated fees are reduced, then it would help them unlock about $9 billion or more for shareholders.
The FTX situation
Once one of the top crypto exchanges in the market, FTX imploded last year in November and left countless investors suffering.
Its hedge fund, Alameda Research, has been accused of using customer funds from FTX for making risky bets.
The founder of both companies, Sam Bankman-Fried is facing criminal charges for commingling funds and defrauding clients.
John Ray III is the new CEO of FTX and has sued Grayscale for ‘redemption of shares’ in an attempt to minimize the haircut that creditors and debtors get in Chapter 11 bankruptcy.
Grayscale itself has been trying to address the redemption issues associated with its Bitcoin Trust and has a lawsuit ongoing with the Securities and Exchange Commission (SEC) on this matter.
If it wins, then it would be able to convert the trust into a Bitcoin ETF, which would enable investors to have exposure to the asset without actually buying it.
A co-founder of Three Arrows Capital, Shu Zhu, said that his hedge fund had collapsed due to the illiquid nature of GBTC.
They had been dealing with a credit squeeze last year, after the collapse of the Terra and Luna tokens. But, according to Grayscale, the lawsuit that Alameda has filed does not have any merit.