Grayscale likely to sue SEC if application for spot Bitcoin ETF Is Denied

Grayscale is reportedly likely to sue the Security Exchange Commission (SEC) if their spot ETF application is denied

Grayscale Could Sue SEC If Application Is Denied

Grayscale Investments could potentially sue the Securities Exchange Commission (SEC) if the agency fails to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin Exchange-Traded Fund (ETF). 

This comes after the company bolstered its legal team to work on the ETF application by hiring Donald B. Verrilli Jr., a former United States solicitor general who served from 2011 to 2016.

As we enter the final month before a response is due on our application to convert $GBTC to an ETF, we have retained Donald B. Verrilli, Jr., former Solicitor General of the United States, as additional legal counsel. A short 🧵 on why:

— Grayscale (@Grayscale) June 7, 2022

Bloomberg senior ETF analyst Eric Balchunas interpreted Grayscale's nomination as a threat to sue the SEC if the regulatory body fails to approve the Bitcoin spot ETF by the deadline of July 6.

SEC likely to approve spot Bitcoin ETF

The SEC is expected to approve the application, according to Balchunas, and Verrilli, a former Obama administration official, will play a crucial role.

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“Good point re Grayscale hiring Obama’s Solicitor General: they could be getting ready to sue the SEC if they don’t get spot approval (which is due by 7/6 and is highly, highly unlikely). Grab the popcorn.” 

Balchunas

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🧵 We want to ensure that we have the strongest possible team of legal minds ready to support our $BTC ETF application. Verrilli will serve as a senior legal strategist, working alongside our attorneys at @DavisPolkReg and in-house counsel.

— Grayscale (@Grayscale) June 7, 2022

The analyst was reacting to a tweet from lawyer Jake Chervinsky, who stated that if the company sued the SEC, the US regulatory organization would not survive a legal battle. Grayscale, according to Chervinsky, has met all of the requirements for approval of the spot ETF.

Strong move. @Grayscale means business.

The SEC's deadline to approve or deny the application to convert GBTC to an ETF is July 6. No doubt, it should be approved. I don't see how the SEC survives a legal challenge if not, especially one led by Don Verrilli.

Mark your calendar. https://t.co/ZbZ7oTXhHR

— Jake Chervinsky (@jchervinsky) June 7, 2022

Preparation For Legal Battle

Grayscale hinted that it might be prepared for a legal battle in the Bitcoin spot ETF approval squabble while announcing Verrilli's appointment. In his new role, Verrilli will be the senior strategist for the Bitcoin ETF application.

Verrilli was the primary lawyer for the government in various Supreme Court matters during his time as the US solicitor general.

The company's CEO Michael Sonnenshein expressed optimism that the ETF application will be accepted ahead of the July 6 deadline.

The possibility of the ETF's acceptance will almost certainly have an impact on the cryptocurrency market, with a particular focus on the price movement of digital currencies. Investors would be able to safely enter the market without directly investing in Bitcoin with a spot Bitcoin ETF.