U.S. Congressman Brad Sherman questioned the Securities and Trade Fee (SEC) about whether or not Grayscale Bitcoin Belief traders (GBTC) can redeem their belongings from the funding firm.
In a Might 11 letter directed to the SEC Chair Gary Gensler, the Congressman claimed that Grayscale prioritized income no matter the way it affected over 850,000 retail traders whose belongings are presently trapped in GBTC.
“Grayscale marketed itself as a approach for retail traders to put money into bitcoin and share in its monetary development with out worrying in regards to the security and storage difficulties that include proudly owning cryptocurrencies instantly.”
In keeping with the Congressman, Grayscale’s determination to problem extra GBTC shares performed a major function within the shares buying and selling at over 40% low cost to its web asset worth. The low cost has narrowed to 39.76% as of press time, in line with ycharts knowledge.
Sherman famous that these actions created issues for hundreds of GBTC traders, including that an SEC intervention was crucial for investor safety.
In the meantime, Grayscale had denied traders’ request for it to permit redemptions, citing Regulation M. The rule prohibits firms 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 unbiased 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 Might 15.
Group welcomes intervention
The letter generated blended opinions from the crypto group, with some describing it as a welcome growth. Nevertheless, 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 sturdy 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.
In addition to that, its dad or mum firm Digital Foreign money Group is in a monetary mess as a result of certainly one of its subsidiaries — Genesis — which filed for chapter on Jan. 19.
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