Grayscale Investment CEO Michael Sonnenshein has informed GBTC shareholders that the firm could offer to buy back up to 20% of the outstanding shares worth approximately $10.7 billion, The Wall Stree Journal reported Dec. 19.
In the wake of recent market contagion, speculation has spread about the insolvency of Grayscale and its affiliated companies, including Digital Currency Group (DCG) and Genesis Global.
Specifically, the Grayscale Bitcoin Trust (GBTC) shares have been trading at a 50% discount relative to the price of the underlying Bitcoin.
To allay the growing fears from GBTC’s free fall, Grayscale reportedly sent a letter to investors hinting at plans to return a portion of the GBTC capital to shareholders if it fails to convert the trust into a spot-bitcoin exchange-traded fund (ETF).
Grayscale has been in a legal battle with the U.S. Securities and Exchange Commission (SEC) for approval to convert its GBTC to an ETF since 2017. The SEC cited possibilities of market manipulation and fraud as reasons for rejecting the application.
Grayscale CEO Michael Sonnenshein said in an interview with WSJ that the firm will fight with all its resources to see that it is able to convert the GBTC into an ETF.
In the meantime, Sonnenshein said:
“If Grayscale is unable to return capital to GBTC shareholders via a tender offer or ETF, the company currently plans to continue operating GBTC without a continuing redemption program until it succeeds in converting it into a spot bitcoin ETF.”
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