Alameda Research Ltd., UTXO Management, and Balch and Bingham LLP today announced the launch of Grayscale Litigation, where shareholders of the Grayscale Bitcoin Trust and Grayscale Ethereum Trust (together, “the trusts”) can join as co-plaintiffs in the previously announced litigation against Grayscale Investments, LLC filed by Alameda, a debtor affiliate of FTX Trading Ltd. and its affiliated debtors (together, “the FTX debtors”). 

According to Grayscale, this effort cannot proceed unless current shareholders collectively owning at least 10% of all shares join as co-plaintiffs in litigation. Shareholders are encouraged to provide their information to participate by Sept. 6, 2023 at Balch and Bingham LLP is prepared to represent eligible shareholders for zero out-of-pocket cost.

John Ray, CEO and chief restructuring officer of the FTX debtors, said, “For years, Grayscale has been depriving shareholders of billions of dollars in value through extracting exorbitant management fees in violation of the trust agreements and hiding behind contrived excuses to prevent shareholders from redeeming their shares. We are pleased to date with the outpouring of support we have received from other shareholders in the trusts who want to join Alameda in its fight to hold Grayscale accountable for its egregious violations. Shareholders of the trusts are determined to recover lost value and demand justice for Grayscale’s consistent failure to protect shareholders’ interests. We urge others to sign on and join to ensure our case can proceed.” 

Since Alameda first filed in March, it’s received overwhelming support from trust shareholders. In addition, numerous funds, family offices and individual shareholders have expressed interest in joining, including:

  • Fir Tree Partners
  • Saba Capital
  • Owl Creek Asset Management
  • Aristides Capital

“Since last year, Fir Tree Partners has been seeking to hold Grayscale accountable for its massive ongoing destruction of shareholder value at GBTC,” said Sachin Gupta, managing director at Fir Tree Partners. “We strongly support this effort by Alameda and dozens of other shareholders to recover the exorbitant management fees that have been extracted from the Grayscale Bitcoin and Ethereum Trusts and to force Grayscale to allow redemptions so that the trusts’ long-time discount to NAV can finally be reversed.”

“Grayscale has enriched itself at shareholders’ expense,” said David Bailey, general partner at UTXO Management. “We’re not standing for it any longer and neither should any other shareholder. We’ve joined this lawsuit to recover the value in our digital assets and we encourage other shareholders to sign on too. It’s time to band together so we can get back the money that belongs to Grayscale shareholders, not Grayscale’s principals.”


On March 6, 2023, Alameda filed a lawsuit in the Delaware Court of Chancery against Grayscale and its controllers, seeking to: 

  • Recoup Grayscale’s historically excessive fees.
  • Reduce fees to a reasonable rate going forward.
  • Open redemptions so that shares once again track the trusts’ asset values consistent with the investment purpose of each trust.

Alameda’s seeking the repayment of hundreds of millions of dollars to the trusts and a ruling that Grayscale and its controllers have breached their obligations under the trust documents and Delaware law by failing to ensure Grayscale’s sponsor’s fees are competitive and by failing to open a shareholder redemption program that could reverse the discount at which the trusts are trading. The changes Alameda seeks would maximize the trusts’ assets into the future and cause share values to better reflect the value of the trusts’ holdings.

In response, Grayscale has argued that the trusts’ governing documents require Alameda’s litigation to be brought collectively by shareholders currently owning a minimum of 10% of the shares of each trust. As a result, Alameda and other shareholders are seeking support from current shareholders in the trusts prepared to join the effort to ensure this litigation proceeds.


The FTX debtors are represented in this action by Quinn Emanuel Urquhart and Sullivan, LLP as legal counsel, and Abrams and Bayliss LLP as Delaware counsel. In their chapter 11 cases, the FTX debtors are also represented by Sullivan and Cromwell LLP as legal counsel, and Landis Rath and Cobb LLP as Delaware counsel. UTXO Management and its affiliates are represented in this action by Balch and Bingham LLP as legal counsel, and Ashby and Geddes, P.A. as Delaware counsel.

Balch & Bingham LLP also represents most shareholders who have agreed to join the suit to date on a contingency basis and will represent additional co-plaintiffs who seek to join the suit on the same basis. Shareholders represented by Balch and Bingham will also be represented in Delaware by Ashby and Geddes, P.A. Meanwhile, Fir Tree Partners, which has expressed strong interest in joining Alameda’s lawsuit as a co-plaintiff, is represented by Willkie Farr and Gallaher LLP as well as Potter Anderson and Corroon LLP.

Source: Alameda Research Ltd., UTXO Management, and Balch and Bingham LLP