Major Shareholders of Grayscale® Bitcoin Trust and Grayscale® Ethereum Trust Urge Others to Join Lawsuit and Recover Value Lost to Grayscale's Mismanagement

Lawsuit Demands Repayment of Exorbitant Fees and Injunctive Relief to Allow Redemptions

Shareholders Interested in Joining the Fight as Co-Plaintiffs Should Visit GrayscaleLitigation.com; Must Join by September 1, 2023

WILMINGTON, Del., Aug. 21, 2023 /PRNewswire/ -- Alameda Research Ltd. ("Alameda"), UTXO Management ("UTXO"), and Balch & Bingham LLP today announced the launch of GrayscaleLitigation.com, where shareholders of the Grayscale® Bitcoin Trust and Grayscale® Ethereum Trust (together, the "Trusts") can join as co-plaintiffs in the previously announced litigation against Grayscale Investments, LLC ("Grayscale") filed by Alameda, a debtor affiliate of FTX Trading Ltd. and its affiliated debtors (together, the "FTX Debtors").

According to Grayscale, this effort cannot proceed unless current shareholders who collectively own at least 10% of all shares in the Trusts join together as co-plaintiffs in one litigation. Shareholders of the Trusts are encouraged to provide their information to participate as co-plaintiffs by September 1, 2023 using the designated website at GrayscaleLitigation.com. Balch & Bingham LLP is prepared to represent eligible shareholders in the lawsuit for zero out-of-pocket cost.   

The FTX Debtors issued the following statement:

For years, Grayscale has been depriving shareholders of billions of dollars in value through extracting exorbitant management fees in violation of the Trust agreements and hiding behind contrived excuses to prevent shareholders from redeeming their shares. We are pleased to date with the outpouring of support we have received from other shareholders in the Trusts who want to join Alameda in its fight to hold Grayscale accountable for its egregious violations. Shareholders of the Trusts are determined to recover value that has been lost and demand justice for Grayscale's consistent failure to protect shareholders' interests. We urge others to sign on and join to ensure our case can proceed.

Since Alameda first filed suit in March 2023, it has received an outpouring of support from the Redeem GBTC Campaign and other shareholders of the Trusts.  In addition to UTXO Management, numerous funds, family offices, and individual shareholders have expressed interest in joining Alameda's lawsuit as co-plaintiffs, including:

• Fir Tree Partners
• Saba Capital
• Owl Creek Asset Management
• Aristides Capital

"Since last year, Fir Tree Partners has been seeking to hold Grayscale accountable for its massive ongoing destruction of shareholder value at GBTC," said Sachin Gupta, a Managing Director at Fir Tree Partners.  "We strongly support this effort by Alameda and dozens of other shareholders to recover the exorbitant management fees that have been extracted from the Grayscale Bitcoin and Ethereum Trusts and to force Grayscale to allow redemptions so that the Trusts' long-time discount to NAV can finally be reversed."

"Grayscale has enriched itself at shareholders' expense," said David Bailey, General Partner of UTXO Management. "We're not standing for it any longer and neither should any other shareholder. We've joined this lawsuit to recover the value in our digital assets and we encourage other shareholders to sign on too. It's time to band together so we can get back the money that belongs to Grayscale shareholders, not Grayscale's principals." 

Background on the Litigation

On March 6, 2023, Alameda filed a lawsuit in the Delaware Court of Chancery against Grayscale and its controllers that seeks to:

• Recoup Grayscale's historically excessive fees,
• Reduce fees to a reasonable rate going forward, and
• Open redemptions so that shares once again track the Trusts' asset values consistent with the investment purpose of each Trust.

Alameda is seeking the repayment of hundreds of millions of dollars to the Trusts and a ruling that Grayscale and its controllers have breached their obligations under the Trust documents and Delaware law by failing to ensure Grayscale's Sponsor's Fees are competitive and by failing to open a shareholder redemption program that could reverse the discount at which the trusts are trading. The changes Alameda seeks would maximize the Trusts' assets into the future and cause share values to better reflect the value of the Trusts' holdings. 

In response to Alameda's complaint, Grayscale has argued that the Trusts' governing documents require that Alameda's litigation must be brought collectively by shareholders currently owning a minimum of 10% of the shares of each Trust. As a result, Alameda and other shareholders are seeking support from current shareholders in the Trusts who are prepared to join the effort in order to ensure this litigation can proceed.

Advisors

The FTX Debtors are represented in this action by Quinn Emanuel Urquhart & Sullivan, LLP as legal counsel, and Abrams & Bayliss LLP as Delaware counsel. In their chapter 11 cases, the FTX Debtors are also represented by Sullivan & Cromwell LLP as legal counsel and Landis Rath & Cobb LLP as Delaware counsel. UTXO Management and its affiliates are represented in this action by Balch & Bingham LLP as legal counsel and Ashby & Geddes, P.A. as Delaware counsel.

Balch & Bingham LLP also represents most shareholders who have agreed to join the suit to date on a contingency basis and will represent additional co-plaintiffs who seek to join the suit on the same basis. Shareholders represented by Balch & Bingham will also be represented in Delaware by Ashby & Geddes, P.A.  Fir Tree Partners, which has expressed strong interest in joining Alameda's lawsuit as a co-plaintiff, is represented by Willkie Farr & Gallaher LLP and Potter Anderson & Corroon LLP.

SOURCE Alameda Research Ltd., UTXO Management, and Balch & Bingham LLP

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