In a shocking move, FTX's divestment of $1 billion in Grayscale ETF shares has led to a considerable outflow, a situation that is now impacting Bitcoin prices.

Following the transformation of GBTC into an ETF earlier this month, investors have withdrawn over $2 billion. A significant proportion is being linked back to the former crypto exchange, FTX, which divested 22 million shares. Grayscale Bitcoin Trust In the weeks after the Grayscale Bitcoin Trust was approved as an ETF by the US Securities and Exchange Commission (SEC), substantial sums of Bitcoin were withdrawn from the fund, which had previously secured billions in assets. FTX notably contributed to this trend, having sold about 22 million shares, equating to nearly $1 billion. FTX As a result, Bitcoin's value has experienced a decline, sitting at $39,552 at the moment of writing, compared to approximately $47,000 one day after the ETFs were approved.

Nevertheless, with FTX liquidating such a significant portion of their assets, the market could see a reduction in selling pressure, especially since it's rare for a bankruptcy estate to liquidate holdings in this manner. witnessed the withdrawal Much like many other large-scale crypto trading firms, FTX capitalized on the price gap between Grayscale Bitcoin Trust shares and the net asset value of the underlying Bitcoin within the fund.

Back in the autumn of 2023, FTX held 22.3 million GBTC shares, with a value of $597 million. Remarkably, this valuation surged to around $900 million on the first day of trading for Grayscale's bitcoin ETF on January 11, when trading concluded at $40.69. experienced a decline Additionally, FTX held stakes in five other Grayscale trusts, along with nearly 3 million shares in a trust managed by ETF provider, which were kept in a brokerage account at ED&F Man Capital Markets, now known as Marex Capital Markets.

The timing of FTX's sale of these 22 million shares aligned with a statement from a trading partner, indicating that they would voluntarily withdraw a lawsuit that came about after the GBTC transitioned into an ETF.

FTX’s Strategic Moves with the GBTC

This lawsuit asserted that over $9 billion in investor capital became locked in GBTC following the collapse of FTX, as part of a broader initiative aimed at recovering and maximizing returns for impacted customers. Furthermore, it alleged that Grayscale had enforced excessively high fees. FTX The original lawsuit named several defendants, including Grayscale CEO Michael Sonnenshein and the parent company Digital Currency Group (DCG) alongside its CEO.

FTX is still dealing with an overwhelming number of claims—about 36,075—filed by customers, amounting to a massive $16 billion. Additionally, the exchange owes approximately $3.1 billion to its top 50 corporate creditors.

The transition of GBTC to an ETF has led to an outflow of $3.8 billion. Bitwise This month, GBTC, the largest Bitcoin investment pool globally, successfully transitioned to an ETF after receiving approval from the SEC.

Grayscale's fund had existed for nearly a decade as a closed-end fund and had accumulated assets close to $30 billion. Alameda Research During its time as a trust, GBTC holders faced obstacles in selling their positions effectively. Following its conversion to an ETF, an estimated $3.8 billion has exited GBTC this week, reportedly contributing to a fall in Bitcoin prices.

Securities and Exchange Commission

U.S. Securities and Exchange Commission Barry Silbert , was also dropped.

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Alisa, a committed journalist with Cryptocurrencylistings, specializes in the realms of cryptocurrency, zero-knowledge proofs, investments, and the broader Web3 space. With an insightful vision for emerging trends and technology, she offers in-depth coverage aimed at keeping readers informed and engaged in the rapidly changing world of digital finance.

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