Grayscale Looking at a 2-Year Timeline to Resolve SEC Case

Grayscale Investments is now fully embroiled in a lawsuit with the United States Securities and Exchange Commission (SEC) after the regulator rejected the firm’s application to convert its flagship Grayscale Bitcoin Trust into a spot Bitcoin Exchange Traded Fund (ETF).

According to the firm’s Chief Legal Officer, Craig Salm, the current case may take as much as 2 years to get a final verdict at the Appellate Court where the filing was made. In a Q&A session, Salm said the rejection from the SEC came despite the firm’s goodwill from the masses as showcased by more than 11,500 comment letters sent across.

He reiterated that the choice of the Court of Appeals is the fastest the firm could record in order to get a speedy resolution.

“because Grayscale is suing a federal agency – the SEC – we bypass the district court level, and our case moves immediately to the appellate court level. This is important because it shortens the timeframe to get a final decision,” he said.

Grayscale Asks the Court to Reviewing the SEC’s Verdict

According to the Grayscale legal chief, the SEC, despite the unanimous decision to reject the proposed product conversion violated both the Exchange Act and the Administrative Procedures Act (APA). 

The firm is thus asking the court to review the SEC’s verdict about its proposed conversion.

“The Petition for Review asks the court to review the SEC’s decision to deny our application to convert GBTC to a spot Bitcoin ETF, and is the first step in initiating a lawsuit,” Craig said.

Should the firm lose to the SEC again at the Court of Appeals, Craig reiterated that there will be two other options to explore. This includes filing for an ‘en banc’ hearing or going to the Supreme Court, the highest judicial body in the United States. While these options are notably extreme, the firm is focused on presenting its best arguments at this time.

Donald B. Verrilli whom the firm hired prior to the pronouncement of the decision will lead the firm’s case in the hearing. Verrilli has a good track record for leading and winning APA-related cases with records dating back to his tenure as the Solicitor General under the President Obama Administration.