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Grayscale CEO breaks down lawsuit against SEC over rejected bitcoin ETF - YouTube
Channel: CNBC Television
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well the securities and exchange
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commission rejecting grayscale's
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application for spot bitcoin etf and the
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company is now suing the sec cnbc
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reached out to the sec on this issue
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they were not immediately available for
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comment outside normal u.s working hours
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joining us now in a squawk exclusive is
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grayscale ceo michael sunshine michael
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great to have you with us
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good morning melissa great to be here
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is there a precedent for this sort of
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action to sue the sec for a rejection
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well melissa it's been a busy 12 hours
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for the greyscale team of course last
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night getting the sec's decision we were
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of course very disappointed but as an
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organization we were ready
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regulators do get sued
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and it does happen frequently last night
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after receiving the sec decision our
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attorneys almost immediately filed a
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petition for review with the appellate
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court in dc and that starts the
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litigation process contesting the sec's
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decision which we of course vehemently
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disagree with what is the core
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uh thrust of that of that suit um if you
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can just give me sort of the elevator
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pitch so to speak on on why the sec is
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wrong in this decision
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well we've laid out these arguments
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throughout the last couple of months
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leading up to this decision um really
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looking at the fact that the sec is
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acting arbitrary and capricious by
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continuing to approve bitcoin futures
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based etfs while continuing to deny spot
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bitcoin etfs and when you look at the
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administrative procedure act which is
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really what governs the way that
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regulators have to govern they have to
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be treating like issues alike and in
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this case they're not they're actually
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discriminating against issuers like
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greyscale who are trying to you know
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bring a product further into the u.s
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regulatory perimeter here
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what is the sales pitch right now for
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prospective gbtc investors michael a lot
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of folks had gotten on board gbtc early
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on when there was no other way to easily
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invest in bitcoin um but now you know
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more recently in hopes that this would
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be turned into etf and that investors
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would actually capture that arbitrage
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which right now is about 28 to net asset
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value um if the gbtc is not converted to
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an etf
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what's that what's the pitch why be in
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this that doesn't track the underlying
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so well
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well certainly a lot of investors are
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putting capital into bitcoin even after
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this recent you know sell-off and if
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they can commit capital to gbtc at you
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know let's say 70 cents on the dollar
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versus putting assets into bitcoin and
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they believe that our common sense
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arguments underpinning this lawsuit will
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ultimately prevail and we will be able
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to overturn the sec's decision we are
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not going to stop we're going to put the
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full resources of the firm behind this
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lawsuit this is what investors want and
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quite frankly what what they deserve
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when we take a step back melissa and you
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and i have been talking about this for
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years gbtc was born in the united states
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in 2013. we've worked to turn this into
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the world's largest bitcoin fund it is
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invested today by millions of americans
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in all 50 states so the fact that a u.s
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regulator is shunning the opportunity to
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bring this further into the regulatory
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perimeter and give investors more
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disclosure you know more protections
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this is an unbelievably missed
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opportunity on their part so if i got
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this right michael then
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it sounds like you're saying that the
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real reason is for the opportunity to
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invest in bitcoin at a discount to
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bitcoin so basically it is the arbitrage
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hope that you're selling at this point
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well i do think that investors tend to
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have a longer term time horizon for
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their bitcoin you know allocations and
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if they can stomach the volatility and
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be patient for it then yes for some
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investors who do have that outlook that
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would be an attractive opportunity and
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again leaning into the common sense
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arguments underpinning this lawsuit we
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will continue to fight for what
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investors want and what we know that
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they deserve is there a timeline um on
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on when this case could be heard and i'm
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i'm just sort of curious because you you
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have
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had this suit prepared you talked about
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it in your blog on grayscale that you're
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prepared for all outcomes so what if the
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outcome is no what if the outcome is the
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sec was fair in its decision and it
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stands
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well an interesting part about this
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litigation is that because we are suing
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a federal regulator uh we actually
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bypass the district court and go
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straight to the appellate court uh we've
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been advised by our attorneys that that
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process could take somewhere between
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nine and and perhaps twelve months but
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of course could be longer or shorter um
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and we will continue to put again the
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resources of the firm uh behind this
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behind this lawsuit um and of course
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continue to do what's in the best
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interests of investors which is of
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course converting into an etf
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and what if you cannot
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we will continue to keep all options on
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the table i think that investors
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recognize that the conversion to an etf
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is going to unlock billions of dollars
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of unrealized shareholder value you know
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today the discount that you mentioned is
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actually really being held back by the
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sec and so ultimately conversion to an
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etf will cause that arbitrage mechanism
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have the shares converge to their net
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asset value
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