Osprey Leads Latest GBTC Takeover Attempt

Osprey Funds is the latest digital assets-focused investment manager vying to take over management of Grayscale’s bitcoin trust (GBTC) as public pressure against the troubled vehicle continues to mount. 

The chief executive of crypto fund issuer Osprey, Greg King, called his company the “best-positioned third party” to manage the trust in an open letter addressed to Digital Currency Group (DCG) CEO Barry Silbert on Friday. 

DCG is the parent company of Grayscale Investments, which has operated GBTC since its 2013 launch. The trust now has roughly $12 billion in assets and imposes a 2% management fee — increasingly called out as unreasonable by the standards of passive crypto products. 

If appointed as GBTC’s manager, Osprey — which operates its own bitcoin trust — would slash GBTC’s management fee by roughly 75% to 0.49% a year. 

“​​We would seek to implement a redemption program as soon as possible,” King said in the letter.

GBTC has been trading at a nearly 40% discount to its net asset value (NAV) this week, according to YCharts.com. 

Grayscale sued the SEC in June after the regulator denied its proposal to convert GBTC to an ETF, an ongoing legal dispute. The company has said converting GBTC to an ETF would accomplish what GBTC shareholders have pined for: the ability of Grayscale to simultaneously create and redeem shares. The move would curtail GBTC’s immense discount to its underlying bitcoins. 

Grayscale CEO Michael Sonnenshein said last month that the company is not interested in offering a redemption program. If the company is unsuccessful in converting GBTC to an ETF, the firm would consider a tender offer, he added.

King’s letter comes after Valkyrie Investments proposed taking over GBTC in a year end letter. Valkyrie co-founder Steven McClurg wrote then that his firm would “facilitate orderly redemptions at net asset value” and lower GBTC’s fee to 0.75%. Osprey, with its .49% proposal, is raising the bar on even lower fees. 

It also comes about a month after hedge fund firm Fir Tree Partners launched a lawsuit alleging “mismanagement” of GBTC and demanding private Grayscale information as to the trust’s inner workings. Grayscale called the suit “baseless” last week.

An online campaign, too, has surfaced in recent weeks and seeks to offer GBTC investors “a credible path to redemptions.”

A DCG spokesperson did not immediately return a request for comment.

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