Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 13. (Read 17091 times)

just to note..
alemedia is no longer/not managed now by 'scam bankrupt fraud'
its now managed by independent accountants/lawyera with licence under regulation of bankruptcy law

thus dont think of it as scammy alemeda trying to scam more
think of it as regulated lawyer/accountants reclawing assets using bankruptcy law

keep this in mind as you read what i say next. and any other future alemeda drama


yes normal customers abide by the service agreement of the company. meaning no recourse of redemption becasue they agreed to buy shares that have terms applied

however.
in regards to bankruptcy
if a now bankrupt company deposited illicit/stolen/abused funds into company X. by law that amount needs to be clawed back from company X at the deposited value/price

this then breaches/supersedes any company X service agreement because bankruptcy law reigns superior to business policy
so alemeda liquidators are trying to claw back initial investment from grayscale. not trying to sell shares to open market on OTC
(obviously if the assets were worth more now compared to initial deposit they would happily sell shares on OTC and now use the "claw back" tool of bankruptcy law)




coinbase and grayscale are not real customers of each other.. they are corporate sisters. thus have different systems and treatment compared to how coinbase treats real customers
EG no point in coinbase charging grayscale 2% if that 2% goes back to DCG
would you charge yourself 2% to yourelf.... nope


cant sue if its "not their fault" grayscale are saying the hold up is due to law/sec. thus not grayscales fault
(although yes grayscale promised an etf)
also grayscale offered the OTX swap of share ownership thus giving users an escape.. although that escape involved passing on the headache to a noob investor



yes users signed a user agreement with terms
normal users cant fight it.. heck even grayscales terms say users cant sue them and instead have to use a mediator to arbitrate disputes.

but when it comes to bankruptcy law and the tools available to legally claw back assets. that instance is outside of the business service agreement policy


bankruptcy law supersedes business service agreement policy
its not that grayscale needs to put in clauses .. its that bankruptcy law of clawbacks is outside and above grayscales service agreement

---

now with all that said
the bankruptcy tool of "clawback" is a law that has more power then grayscale business policy

meaning alemeda has a claim to clawback the funds it gave grayscale

however
grayscale "could" use a defense that:
the deposit/investment into grayscale pre-dates the criminal acts of alemeda that resulted/consequential to cause the bankruptcy

in short the investment has no relation/result/cause related to the bankruptcy so are not part of any claw back scope of use of such tool

I get that, my point is that the law suit is likely hot air. Ie they have no right to redeem their shares directly from Greyscale, instead have to dump on secondary market. It's all very dodgy, that I'm not denying. I just imagine there's small print covering Greyscal legally right now and effectively investors got what they paid for: shares without the guarantee of redemption until an ETF is approved.


Agreed, it's almost certainly Coinbase or similar big entity that hold the shares.


Apart from to Coinbase Custody that is. At least 1% I imagine as a special deal on a large holding.
(As far as I'm aware Coinbase charge a lot for custody than 2%)


Again I doubt they "promised" an ETF, as otherwise everyone would be suing them for failing to provide - not just Alameda.
I otherwise don't see how they would be getting a free service from the likes of Coinbase in a hurry.


What they should and shouldn't be doing isn't the point here, it's about the letter of the law. Of course they should have allowed redemptions all along, then there wouldn't be such a discount.

The fee is otherwise the custody of Bitcoin in exchange for shares, so I'd say they are probably entitled to charge what they want for that, it's up to investors to decide whether they feel it's fair, not to determine how much it should cost them. Even if they "shouldn't be" charging a fee, if investors sign contracts accepting such terms, then they have no legitimate claim against Greyscale is bottom line.


It sounds like investors got greedy buying at a premium, but now don't want to sell at a discount. I'm really not surprised!
The premium was never a guarantee right? Hence a parity price wouldn't have been a guarantee either...
Clearly the discount is about lack of ETF that was expected years ago, not much else.


Not arguing it's not one step away from a ponzi, to me it just seems like the game of speculation. Investors spent years speculating on an imminent ETF and bought at a premium, then spent the last couple of years speculating on there not being an ETF and instead bought/sold at a discount. If an ETF does get approved by SEC, then I don't doubt the discount will evaporate.

Overall, I have little sympathy for GBTC holders, they got exactly what they paid for. Paying a premium with a fee anticipating an ETF, or otherwise selling at a discount as there is no ETF. If they wanted to hold Bitcoin then that's what they should have bought, not effectively an asset that speculates on a Bitcoin ETF from Greyscale - that I'm certain they never promised, because obviously they can't.

That might sound harsh, but GBTC holders should really have read the small print here. Just because Greyscale intended to convert GBTC into an ETF, doesn't mean it was/is going to ever happen. In summary, the reason I say the Alameda law suit is hot air is because this isn't about "right and wrong" this is about "legal and illegal", so arguing the former has no place in regards to this court case.

Unless there is some bankrupty clause in these contracts (which I doubt there is), then Alameda won't be getting a dime from Greyscale. They will just have to suck it up and dump for a 34% discount on secondary market. Of course knowing that they would be geting 50% more value from their holdings is why they are "trying it on" with Gresycale, no other reason imo.

OR
other possibility
another business buys out grayscale as the "sponsors" of the shares. and takes over the management

..
some people believe that grayscale should not have pre-sold shares of a product they have not been able to offer for many years. (much the same as pre-selling pre-mined coins of an ICO)

where by the SEC might actually make a decisions to demand that grayscale offer 100% redemption or lose its other financial licencing permits

EG if tesla were doing pre-orders for cars. but the department of transport were refusing to validate the safety status of tesla cars, thus not allowing tesla to produce/sell cars..
eventually the department of transport could say "these cars will never be good enough for the road so tesla need to offer refunds and recall any prototypes currently on the road"

The main issue is that this good trade (for Grayscale) will go on until the spot ETF is approved. Hence I see little chance of it happening in the short term.

according to the financial times alemeda bought 22m shares of GBTC
so not hot air(they have skin in the game)

part of the FTX/alemeda bankruptcy is to claw back all invested value held elsewhere to liquidate it for repayments to ftx/alemeda customers

so if grayscale are not allowing redemptions. they are preventing the clawbacks of 22m of shares, currently valued today at $12.90/share *22m= $283.8m value

..

heres what i think
grayscale is not actually managing the custody of the locked btc in trust... coinbase does
so grayscale has no large overheads/labourcosts of "managing trust"
grayscale is not offering its promised ETF right now thus there is no overhead/labour cost of running an ETF
thus grayscale should not be implying that it should take its 2% management fee if its not offering the services that the fee's imply to cover

as for the redemption part
grayscale took in value at premium(initial share by from grayscale years ago).. but now tell people to fight with each other on another platform between themselves to trade out at discount(loss) via OTC

where by grayscale are the winners but their customers are the losers. whether the customers hold(and pay fee) or sell at loss(discount) to another novice customer who thinks they are getting in on a good deal
almost like one step away from a ponzi

At the same time, Alameda Research is now trying to sue Gresycale over ‘self-imposed redemption ban’:

https://cointelegraph.com/news/alameda-research-files-suit-against-grayscale-over-self-imposed-redemption-ban

But if I had to guess, this law suit is likely a lot of hot air - a bit like Alameda's holdings: total nonsen\se.

For anyone wanting to keep an eye on the GBTC premium/discount (as didn't see it referenced in OP):

https://ycharts.com/companies/GBTC/discount_or_premium_to_nav

If it get's back into a more reasonable 10-25%, this could well be good for Bitcoin if there are investors willing to take a risk that with an ETF approval, they'd be getting a discount on Bitcoin. Not forgetting that if the discount is decreasing, then investors are buying shares of GBTC right now which is already a positive in itself. Not that I'm recommending it, as seems highly speculative right now.

grayscale expects a ruling to this in the fall..

In an unexpected move, Grayscale is up 10% on the day with a BTC down 1.5%. The discount is finally narrowing.
This is because of the court hearing of for the SEC vs Grayscale trial.

GBTC Discount Narrows to Lowest Level Since November Following Court Hearing

According to some people in social media, Barry Sibert's Digital Currency Group has $262 million in cash but they have a loan of $575 million that should be paid on May and a $1.1 billion loss through Genesis Global.

The question everyone should want to ask but they might only be afraid is DGC presently insolvent? What will happen to Grayscale?



The venture capital firm focused on cryptocurrencies – Digital Currency Group (DCG) – reportedly marked a loss of $1.1 billion last year.

Some of the primary reasons for the downfall were the collapse of the crypto market and the bankruptcy of its subsidiary – Genesis.

Source https://cryptopotato.com/crypto-giant-dcg-revealed-a-loss-of-over-1-billion-in-2022-report/

I am not sure if I would characterize the "ability to get exposure" to GBTC shares as a "work around" merely because you are get some of them - because the GBTC shares are on the market and they are freely traded on the market, so the mere fact that you are getting access to such shares "on the market" does not likely have much of anything to do with the inability to buy shares through the official GBTC managers/website.

You are describing part of the whole contention in regards to why people who hold GBTC shares are complaining that the price of the GBTC shares are not returning to a price that is closer to NAV.... but that still has never meant that the GBTC shares have not been available through the market.. especially after those shares go through their initial 6 month period of being locked up.. so it is my understanding that in the beginning of getting GBTC shares through Greyscale, they were not able to be sold for 6 months (and I recall - or believe that I recall) that in the first year or so (in 2014 or so) that they were not able to be sold or traded on the free market for 12 months.. but that 12 month period got reduced to 6 months, and those kinds of "locked-up" shares are not really available anymore since none of the shares are newly issued by the Greyscale trust for quite a long period of time, so all of the outstanding shares are able to be traded on the free market - and sure the ways that they are "able to be traded" likely has to go through authorized exchanges.  It is not like any of us normies are able to buy GBTC shares and then hold them in our own private digital "crypto" wallet or put them in our home safe.

You know I noticed this too. Some 401ks have the ability to do a “Personal Choice” investment option. Transamerica has is, you link that investment option to a Charles Schwab account and that is the work around if you have a Trans 401k but I’m not sure if this option is available in other 401ks.

By the way, I just listened to another interview with Sonnenshein on The Wolf of All Streets podcast (It was published today, and it was about 40 minutes in length), and surely, you can see that there are possibilities to still have substantive discussions, and sure maybe arguments can be made that the interviewer (Scott Melker) was not combative enough and did not ask enough "tough questions," yet I was still able to get some perspectives from Sonnenshein from the Wolf Of All Streets podcast that I could not (and did not) get from the Peter McCormack interview.. and which one was better?  Either or were they just "different."

I would argue that they were just different, and it is up to each of us to gather as much information as we might feel that we need in order to determine if we need to know more or "look into" certain angles more, or maybe sometimes, we are not very attached towards taking a side in which there are disputes but also various spins and various potentially differing perspectives that may or may not mean that every single person is a scammer, even if s/he might be taking a different perspective towards a matter (including what his/her role is) in the matter and what s/he might be willing to "publicly" share at any given point in time.. or based on which questions are presented and how those questions are presented.

For sure, even though I consider McCormack to have had gone a bit too extreme and a bit too confrontational, there can be quite a bit of a refreshing angle to see at least some kind of pushback and "tough questions" as compared to the times in which some of the mainstream interviews will hardly challenge at all... .. so in that sense, mostly the podcast format does seem to lend to better interviews as compared to those interviews that ONLY last for 5-10 minutes, and also, McCormack did seem to be on better grounds because Sonnenshein had asked for the interview (even though Sonnenshein had to spin the matter as if McCormack had asked for the interview, which McCormack made very clear that Sonnenshein had asked for the interview). 

Today Bitcoin offers a lot of value by being a decentralized currency and cryptographically secure store of value and I prefer to discuss BTC in terms of utility and value. This makes it clear and bright. Very interesting topic full of well-founded information. The author is clearly a professional in this field. I really like it !!

Thank You.

ok

i understand your prospective

i just found it funny how sonnenschien was saying 'we do absolute full due diligence on "source of funds" ' and the backs off and says things that sound like 'nothing to do with me' 'i am not part of it', 'i dont know what genesis done' in regards to funds grayscale received and earned 2% commission from

which is where i feel mcCormack was pushing sonnenschien.. due to sonnenschien being sister company to genesis so has absolute "data sharing" access to funding sources(due diligence) as does their other sister company chain analysis. yet sonnenschien wants to plead ignorant 'nothing to do with me'.. but then says how their due diligence is thorough

and then says their boss(silbert) is "visionary", how silbert has all these companies he masterminded.. but then says how silbert knows nothing/was blind to the whole schemes..
it just seemed to be empty ping-pong(table tennis) answers..
changing from his boss being well involved and inspiring to a uninvolved non entity..
 
just seems like he wasnt answering questions and just pumping some publicity of ass kissing his boss with positive words and avoiding mentioning the negative

that said.. on sonnenscheins side. the interview was a casual meetup chat. not a legal deposition or court ordered witness statement. thus sonnenschein had no legal duty to say anything.

however by acting like a evasive guy saying triggering stuff like "i feel sorry" but then "whats unethical" followed by 'silbert is a visionary' then 'silbert said nothing did nothing' (more ping pong) i can see why mccormack picked up on the ping pong games and tried to drill harder to get a straight answer

i found it good that mccormack did push and not just let such ping pong publicity stuff just get said unquestioned

The punchline seems to be that I do not feel strongly enough to either battle or to research further in order to be motivated to battle, and I guess another part I was largely just wanting to mention my disagreement because I did not want my having had sent a merit to be confused with agreement, but I do not feel that strongly about any of the matter because I largely said my perspective and you said your perspective and our perspectives differed on each of the points... but it is not really anything that I believe is worth arguing about...

Of course, there is quite a bit of tension in the space involving various lawsuits and even the manipulations in the past 2-3 years that were going on in regards to the anticipations that GBTC would return to less of a discount with the passage of time, but those ended up losing bets that seemed to have had been pretty BIG.  I am not going to proclaim to understand all of the dynamics of the various players or even wanting to study the situation any more than I get through my regular superficial looking at these matters... including that I don't advise people to invest into those kinds of products, but I can see why people would do it, especially historically when GBTC was one of the ONLY ways that some of the BIGGER investors could get exposure to BTC through their accredited accounts or even US Govt approved retirement accounts such as 401ks, through certified investment advisors or even pension funds that might have gotten some exposure to BTC through GBTC from about 2014 to 2019 or so when GBTC was the ONLY such BTC exposure related product.

I thought that McCormack was a bit overly confrontational, and of course, Sonnenshein had been a public spokesperson for Grayscale for quite awhile including being amongst the most senior of employees with the company.

Even if we might consider Greyscale is not really putting all their efforts into trying to win a lawsuit to get their fund converted to a ETF, they seem to have had been making good arguments regarding their seemingly disparate treatment in not getting approved, and the mere assertion that GBTC is not suffiicently aligned iwth NAV or that there were attempts to manipulate GBTC does not seem to be enough to deny such an ETF.. but whatever.. I don't really care because I am not going to read all of the legal arguments back and forth or try to figure out how to argue Grayscale's case better or to suggest that they Government is correct in their ongoing denial of an ETF.. I don't really care that much, and it seems that at some point they are either going to be forced into approving Grayscale as an ETF.. or they will give the ETF to one of Grayscale's competitors such as JP Morgan or Blackrock or some other nonsense in which governments just love to take sides and to fuck around with the market in ways that are not easy to be able to prove in court or to predict, even if you (Franky1) have a theory about the SEC being sufficiently justified in not approving their ETF application.

In other words, I don't really have a problem with anything that you are saying, and I will just sit out the matter and watch and I don't really want to study it anymore than I happen to have some superficial ideas on the topic.

(not debating or wanting to fight this out)

out of interest which bits dont you agree with, just to understand.. in case im missing something

I don't really agree with you on either of those points, but I appreciate your fairly clearly providing your perspective on each of the two topics....

here is the thing
when grayscale says its got a trust..
meaning it tries to separate its corporation liability away from ownership of the trust(the purpose of a trust). and saying the trust is "owned/benefits" by its share holders
this means grayscale should be more transparent to the holders
(^ mccormack see's things from this side ^)

reality is that. (v sonnenscheins prospective v)
grayscale own the trust and the coin and its not actually the share holders owning the coin in the trust, thus they dont want to disclose things which can hurt their business if revealed

which is why mccormick was pressing sonnenschein for more details in the end. as he was siding with the view of how things are affecting share holders (un)informed investment.. rather then siding with how things can affect grayscale

mccormack was asking from the side of consumer/user protection. sonnenschein was answering from the side of corporate protection

investors should be informed about what they are getting into. and anyone denying disclosure seems shady, anyone shouting the utopian best case, while avoiding explaining the real events seems shady
as soon as sonnenschein said "silbert is a visionary" it really shown sonnenschein was just positive spinning everything and trying to say silbert didnt get involved but he is super-god work-husband and everyone should not speak ill of him denying that silbert ever was informed/knew about genesis things and avoiding answering if silbert ever talked about risks with sonnenschien
kinda bad business if there are known risks but parent company doesnt inform its different teams or mitigate that risk

---

as for the SEC thing..
if i was a regulator seeing an application of a ETF that "promises" to trace the bitcoin price.. yet. right now in its private OTC offering its NAV has NEVER pegged bitcoin 1:0.001.. i too would not want to approve such an offering that is already breaking its peg promise of exposure to bitcoin at a trace rate

I did not watch the video, but I listened to it a day or two prior to your post, Daltonik.... and it would be good to note, that McCormack was a bit combative in his interview, and at first, I was fine with it, but towards the end it became a bit more and more uncomfortable because McCormack was increasingly being more direct in his assertion that Sonnenshein was lying.  At first, McCormick was just framing it as public relations' spin, but McCormack became more and more accusatory in terms of suggesting that Sonneshein knows more than what he is saying and that Sonnenshein is being disingenuine in the way that he is spinning matters and refusing to share some internal details.

Personally, I do think McCormack might have gone overboard because especially Grayscale has the lawsuit against the SEC and also some somewhat combative disputes with Gemini.. through the Genesis sister company.. and McCormack was largely accusing Sonnenshein of being too protective of Barry Silbert.. and even several times proclaiming that part of the problem is their pursuit of money and getting involved in shitcoins too.. .. but whatever.. some of this will hopefully end up being ironed out in the coming months.. and surely there is the SEC hearing that is about to happen and doubtful that Grayscale will win that (oh and Peter suggests that they are not even really trying to fight to get an ETF.. they are just going through the motions... blah blah blah.. because they like the fees that they continue to earn)... and then also, there is the tentative settlement between Genesis and Gemini (and other Genesis creditors) in connection with the forced Bankruptcy filing..... so we still have to see how those matters are going to be worked out in the coming months.. or perhaps dragging out longer.. I believe that there are some ways that resolution could come easier with some of the bankruptcy "holes" if the BTC price goes shooting up.. but of course, there are even complications with the SEC filings against Gemini and Genesis regarding the "earn" products that the SEC claims should not have had been even had been being offered without proper registration with the SEC.. and probably inadequate disclosures, too.. even presuming that any of the clients using those products might not have been eligible investors... and surely some of the bitcoin and crypto proponents find some of the security regulation requirements in regards to "eligible investors" to be way too patronizing for current times, which likely many of us likely have mixed views in regards to how restrictive is restrictive enough to "protect" consumers while at the same time not prohibiting normies from being able to invest or to make some of their own choices regarding their investment choices without having to ask permission to be scammed.