Fir Tree Comments on Grayscale's Latest Excuse to Obstruct Shareholder Redemptions
Fir Tree Partners ("Fir Tree" or "we"), a meaningful shareholder of the Grayscale Bitcoin Trust ("GBTC"), today issued the below statement in response to Grayscale Investments' (together with GBTC, "Grayscale") Twitter Spaces discussion held on February 8, 2023. In December 2022, Fir Tree filed a lawsuit in the Delaware Court of Chancery seeking information from Grayscale on potential mismanagement of and conflicts of interest at GBTC.
"For over seven years, Grayscale has pointed to the SEC's Regulation M as the primary reason it cannot provide shareholder redemptions. However, ever since we filed our books-and-records case last year, Grayscale began backpedaling by admitting in its year-end investor letter?and again during its recent Twitter Spaces?that Reg M applies only when GBTC is simultaneously creating and redeeming shares. Simply put, Reg M does not prevent Grayscale from allowing shareholder redemptions and Grayscale knows it.
Grayscale is now claiming that it needs relief from the SEC's ?tender offer' rules to provide redemptions. This excuse is as strange as the last since issuer tender offers are common and not controversial. Grayscale can announce a tender offer for a fixed number of shares at any time it chooses, provided that it makes the offer at a fixed price (or at NAV) and holds it open for 20 business days. It would involve little more than Grayscale filing a short Schedule TO with the SEC on the date of the announcement.
If Grayscale believes more is required to run a tender offer, it should immediately answer Fir Tree's prior public request to explain the pricing, funding source, and design of its proposal. Grayscale's CEO instead remains completely non-committal, claiming that Grayscale will only consider a tender offer if it exhausts all ?legal challenges and judicial challenges to the SEC stance on spot bitcoin ETFs,' all the way up to the U.S. Supreme Court. More stunning still, Grayscale again blamed its shareholder-unfriendly actions on the SEC, arguing that ?working on a tender offer . . . would mean the SEC shut the door on further protecting investors' by declining to approve a spot bitcoin ETF.
As Grayscale doubles down on its self-serving campaign to blame the SEC for the problems it created, GBTC's approximately 850,000 shareholders are the ones paying the price. With Grayscale parent company Digital Currency Group's empire faltering and GBTC's discount to NAV continuing to grow, it is time for Grayscale to act in the best interests of all shareholders. Fir Tree Partners remains committed to taking all available actions to ensure that Grayscale is held accountable for these issues."
About Fir Tree Partners
Fir Tree was founded in 1994 and is a New York based private investment firm that invests worldwide in public and private companies, real estate and sovereign debt. Fir Tree manages assets on behalf of leading endowments, foundations, pension funds and sovereign wealth funds. Where shareholder engagement could be value-accretive for its investors, Fir Tree follows a Positive Activism® approach in creating, not just identifying, value.
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