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 at the moment trapped in GBTC.
“Grayscale marketed itself as a manner 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 straight.”
In accordance with the Congressman, Grayscale’s resolution to difficulty extra GBTC shares performed a big position 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 keeping with ycharts knowledge.
Sherman famous that these actions created issues for hundreds of GBTC traders, including that an SEC intervention was needed for investor safety.
In the meantime, Grayscale had denied traders’ 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 unbiased director on its board and whether or not its 2% Bitcoin-based price was excessive.
The lawmaker requested that the monetary regulator reply these questions earlier than Might 15.
Neighborhood welcomes intervention
The letter generated combined opinions from the crypto neighborhood, with some describing it as a welcome growth. Nevertheless, a number of others criticized Sherman and regarded 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 robust anti-crypto rhetoric in his interventions in regards to the house.
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 Foreign money Group is in a monetary mess on account of one among its subsidiaries — Genesis — which filed for chapter on Jan. 19.
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