Grayscale Feel Encouraged by First Court Hearing Against SEC

Grayscale finally goes to court with the United States Securities and Exchange Commission (SEC) over the rejection of its application to convert its flagship Grayscale Bitcoin Trust to a spot Bitcoin (BTC) Exchange Traded Fund (ETF). From the look of things, it seems the first appearance went well in favor of the crypto assets management company.

Michael Sonnenshein, Chief Executive Officer (CEO) of Grayscale confirmed that the company was encouraged by the outcome of the hearing at the Washington court. Some judges from the Circuit Court of Appeals for the District of Columbia raised concern about the SEC’s stance in relation to its decision to reject Grayscale’s application. 

The judges were concerned with the SEC’s reason for portraying that BTC’s future prices were more resistant to manipulation than the spot market. Noteworthy, this is the spot market where the ETF would be based. The U.S. regulator has approved some BTC futures applications in the past but has constantly rejected funds that hold Bitcoin directly including that of Grayscale Investment. 

“We are really appreciative as an organization of the opportunity to have this case heard in the DC circuit,” Sonnenshein said during a Bloomberg interview adding that “The receptivity has been really positive from investors.”

“We walked out of the courtroom feeling really encouraged and hopeful that those arguments would be persuasive to the court.”

Grayscale Armed For SEC Legal Battle

Some analysts share Grayscale’s sentiment on its victory at the court hearing. Bloomberg’s senior litigation analyst Elliott Stein said;

“Going into the argument, we thought the SEC was 60% favored, yet we now think Grayscale is 70% likely to win.”

Another individual identified as Vasu Nigam explained that it is, ”always difficult to predict the final outcome, but this will definitely not be an easy win for the SEC.”

Meanwhile, Grayscale is still optimistic about the outcome of this legal battle after putting in so much effort to ensure that it ends victoriously in its favor. 

Grayscale Investment went as far as onboarding renowned legal practitioner and former Solicitor of the United States under President Barack Obama Donald Verrilli Jr. as a part of its legal team. The company sent its first appeal to the court over the application rejection just before the end of Q1 2022.