Grayscale has been dealing with a misleading advertising lawsuit since Monday, January 30th. The US crypto asset manager is issuing the world’s largest Bitcoin fund GBTC. With a market share of 99.5 percent, the company is almost unrivaled in this sector. Almost, because there is a competitor: Osprey. And now he has filed a lawsuit.
Grayscale vs Osprey
Osprey alleges that Grayscale misled clients by misrepresenting the likelihood of its fund being listed as a spot exchange-traded ETF, thereby maintaining its market dominance. Meanwhile, Grayscale has been planning to convert its bitcoin trust fund into a spot ETF for some time. However, previous attempts failed because of the US Securities and Exchange Commission (SEC).
“Only because of false and misleading advertising and promotions to date, Grayscale has been able to maintain approximately 99.5% market share in a two player market, despite charging more than four times the asset management fee Osprey charges for its services,” explained the company in the lawsuit. Grayscale presented the conversion as “a foregone conclusion,” even though the company knew the approval would never happen.
It seems that a veritable wave of lawsuits is currently breaking through the crypto space – sometimes from within its own ranks, sometimes from outside. This is also the case with the Digital Currency Group, the parent company of Grayscale, which is currently in another legal dispute with the SEC for unregistered securities trading.
Misleading advertising strategies are not an isolated case
The insolvent crypto lender Celsius also has to answer in court, also with regard to its marketing measures. Reuters has received a report from a US bankruptcy examiner, who is investigating the company’s bankruptcy proceedings. According to the report, the business model the company advertised and sold to customers was not what it actually operated. From the start, Celsius and its founder Alex Mashinsky, who is currently facing fraud allegations in the United States, failed to deliver on their promises related to the in-house token (CEL) and other business activities, the document said.
After Celsius filed for bankruptcy, bankruptcy judge Glenn Miller appointed former prosecutor Shoba Pillay as an independent examiner in September. Among other things, she is to investigate whether the company has embezzled customer funds. Billions of dollars in customer funds are currently in the insolvency estate of the bankrupt crypto company. How much of it investors will see again is still uncertain.
