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Osprey seeks review in $2M Grayscale Bitcoin ETF lawsuit

Osprey seeks review in $2M Grayscale Bitcoin ETF lawsuit

GrafaGrafa2025/02/11 13:00
By:Liezl Gambe

Osprey Funds is requesting a Connecticut state court judge to review his decision in favor of Grayscale Investments in a $2 million unfair trade suit related to Grayscale’s Bitcoin (CRYPTO:BTC) fund.

Osprey filed a motion for reargument on February 10, asking Connecticut’s Superior Court to reconsider Judge Mark Gould’s February 7 ruling.

Osprey argued that the decision was made "before the close of discovery" and improperly expanded an exemption under the Connecticut Unfair Trade Practices Act (CUTPA).

Osprey initially sued Grayscale and Delaware Trust Company in January 2023, claiming false advertising of the Grayscale Bitcoin Trust (GBTC).

Osprey alleged that Grayscale's actions allowed it to dominate the market by presenting the conversion of its trust into an ETF as a "foregone conclusion," despite knowing it was unlikely to occur.

Judge Gould ruled in favor of Grayscale, stating that Osprey’s suit, which involved allegations about buying and selling securities, fell under an exemption from CUTPA.

He noted that Osprey and Grayscale were the only two asset managers offering Bitcoin exposure through trust-based products at the time.

The SEC approved GBTC’s conversion to an ETF in January 2024, one year after the suit was filed, following a court loss for the SEC against Grayscale.

Osprey had previously proposed a settlement of nearly $2 million in July 2024, but Grayscale declined the offer.

In its February 10 motion, Osprey argued that Judge Gould's ruling did not adequately consider how deceptive advertising is handled by the Federal Trade Commission and Connecticut courts, in contrast to securities transactions under Connecticut and federal securities laws.

Osprey contended that the exemption for ‘securities transactions’ under CUTPA has never been applied to deceptive advertising claims between competitors in the securities, asset management, or cryptocurrency industries.

Osprey emphasised that its claims are focused on Grayscale’s unfair competition and deceptive advertising, rather than fraudulent securities transactions.

At the time of reporting, the Bitcoin (BTC) price was $98,296.64.

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