The parties notified the SEC that Genesis had withdrawn from Grayscale Bitcoin Trust and terminated its marketing support agreement.
A notice to the SEC indicates that cryptocurrency broker Genesis will no longer partner with Grayscale in the distribution and marketing support of Grayscale Bitcoin Trust shares. As of 3 October, Genesis is withdrawing from the trust’s authorised participants, although it will continue to serve as a liquidity provider.
In analysing the reasons behind the termination of the agreement, which has been successfully in place for the past four years, cryptocurrency community experts agree that several events may have influenced the parties’ decision.
First, Genesis CEO Michael Moro resigned in August amid the ongoing crypto crisis, losses and a 20% staff reduction. The top executive’s dismissal was accompanied by information about the significant loss of Genesis assets resulting from the collapse of hedge fund Three Arrows Capital. The loss was so significant that it required the intervention of parent company Digital Currency Group to help offset some of the losses.
Secondly, last week, Genesis trading and lending director Matthew Ballensweig announced that he was stepping down to become an advisor to the company.
Third, Grayscale set the final stage, after an unsuccessful attempt to convert Grayscale Bitcoin Trust into an exchange-traded fund traded on the OTC market. The application was rejected by the SEC because, in the proposal, the company failed to justify to the regulator a set of measures “to prevent fraudulent and manipulative activities and practices”.
In response, Grayscale CEO Michael Sonnenshein filed suit against the SEC, accusing the regulator of “failing to apply a consistent approach to similar investment vehicles.
Don’t forget to subscribe to our Telegram channel.