Tag: donald verrilli

Grayscale Investments LLC has hired Donald B. Verrilli Jr to enhance its legal team, who was a solicitor general under the Obama administration from 2011 to 2016.

The United States Securities and Exchange Commission (SEC) is expected to announce its final decision next month for the application of the conversion of Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin Exchange Traded Fund (ETF) filed back in October last year by Grayscale Investments LLC.

In preparation for this historic verdict, the company has onboarded Donald B. Verrilli Jr as the latest member of its legal team. Verrilli’s reputation precedes him, and he has a lot of years as the Solicitor General during the Obama Administration, a position he held from 2011 to 2016.

The move by Grayscale aligns with the company’s plans to be adequately prepared for whatever outcome it will get from the SEC which in this case is narrowed down to either a ‘Yes’ or a ‘No’. As notably insinuated by CEO, Michael Sonnenshein, getting a No as an answer may ignite a legal action in which the firm plans to sue the SEC.

“It’s paramount that Grayscale has the strongest legal minds working on our application to convert GBTC to an ETF, and we are thrilled that Verrilli will join our outstanding legal team,” a Grayscale spokesperson said, underlining Verrilli’s long experience before the high court, including major wins defending the Affordable Care Act and legal recognition of same-sex marriage.

A lot of asset and investment managers have received rejections to their applications from the SEC with the latest being Fidelity Investments and One River Digital Asset Management respectively. While the majority of pundits might predict another rejection on the way for Grayscale, the firm is notably more enthusiastic it is going to get a Yes, breaking history as the very first in the United States to be granted such approval.

In the runup to July 6, Grayscale said it is preparing the GBTC products so they can easily be converted into a spot ETF should the SEC come through with a positive decision.

The United States Securities and Exchange Commission (SEC) dashed the hopes of Grayscale Investments with a rejection of its application to convert the Grayscale Bitcoin Trust product to a full-spot Exchange Traded Fund (ETF). 

In response, the investment asset manager has filed an appeal with the United States Court of Appeals for the District of Columbia Circuit where it will argue that the regulator violated the Administrative Procedure Act (APA) and Securities Exchange Act of 1934.

The SEC’s rejection is predicated on the fact that there is no trusted system with which to prevent fraud, the same position it has hinged its past rejection decisions on. The swift appeal filed by Grayscale is because it was prepared for this sort of action as Chief Executive Officer, Michael Sonnenshein had promised lawsuit months prior to when this final decision was expected.

“Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation — and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the U.S. market,” Sonnenshein said.

The company tapped Donald Verrilli, a top Solicitor under the Obama Administration as a part of its legal team back in June. Verrilli will now be leading the charge against the SEC, arguing that the fact that there are Bitcoin Futures ETFs running on US exchanges invalidates the lack of trust in the safety of the ecosystem that the SEC hinged its decisions on.

“This is a place where common sense has a really important role to play. You’ve got a situation now in which you have certain kinds of exchange traded funds, one that is focused on bitcoin futures, and the SEC has approved that, the SEC is given it the seal of approval,” he said to reporters back in June. “In order to do so it had to make a determination that that giving this approval was consistent with the securities laws, and in particular, that that there wasn’t a sufficient underlying risk of fraud and manipulation.”

The timeline of the appeal is yet to be unveiled, but this may be yet another long-drawn legal battle between a crypto-native firm, and the US SEC after Ripple Labs Inc.

A legal official of Grayscale Investment said the company has confidence in a lawsuit against the U.S. Securities and Exchange Commission (SEC). The company is struggling in a legal battle with SEC for applying to convert its Grayscale Bitcoin Trust (GBTC) product to a spot Bitcoin ETF. 

For many that might have been wondering whether Grayscale Investments has a chance against the United States Securities and Exchange Commission (SEC) whom it dragged to the Court of Appeals, the company’s Chief Legal Officer (CLO), Craig Salm has affirmed that the case the firm has against the regulator is a solid one.

Grayscale initiated a lawsuit last month when it received a rejection decision with respect to its application to convert its Grayscale Bitcoin Trust (GBTC) product to a spot Bitcoin Exchange Traded Fund (ETF). Drawing on the success of the GBTC product amongst investors, Grayscale said it has hoped to step up the designation, and regulatory provisions of the product by upgrading its status.

The SEC, however, did not see the company’s ways and like other notable Bitcoin ETF rejections, the regulator said it has issues with how the price for the spot BTC ETF will not be subject to manipulations. To back its Petition for Review filed with the Appellate Court, Craig said that the SEC is contradicting itself considering it has previously approved a slew of Bitcoin Futures ETF in the US.

To Grayscale, both Bitcoin Futures and Spot Bitcoin ETFs derive their prices from spot Bitcoin making them very similar. In an expository Q&A, Craig said the timeline for the completion of this legal brawl is indeterminate, but from precedent, it may take as much as 12 to 24 months.

“We can’t be certain about timing, but based on how long federal litigation tends to take – including briefings, oral arguments, and a final court decision – it can typically take anywhere from twelve months to two years, but could be shorter or longer. However long it takes, we believe the strength of our arguments should result in a final decision in our favor at the D.C. Circuit Court of Appeals,” he said.

Grayscale is one of the few firms that report its products to the SEC and Craig confirmed that the lawsuit will not alter its working relationship with the regulator. Its confidence in beating the SEC is hinged on its strong case and the prowess of renowned solicitor, Donald B. Verrilli whom the firm recently onboard as a part of its legal team.