Could Grayscale Actually Defeat the SEC in Court?

It looks like the Grayscale Bitcoin Trust could be one of the few digital currency companies to get its way against the Securities and Exchange Commission (SEC). After several months of deliberation, the lawsuit the company filed against the federal financial agency could wind up taking a very unexpected turn.

Grayscale Might Pull off a Win!

Many companies have sought to take on the SEC in the past, though few have been successful. This is arguably what’s making Grayscale so important. While the company’s bitcoin ETF application was rejected (like so many others) by the SEC, Grayscale decided it wasn’t going to take the abuse sitting down. The company filed suit against the agency, claiming there was no valid reason for its application to be hit with a “no.”

Initially, it was believed the SEC would hold precedence in the case. However, the judge overseeing the matter appears to be more sympathetic towards Grayscale, and it looks like the firm has a true chance of winning. If this were to happen, it would be a first for any crypto enterprise that’s taken on the SEC. One could assume things would boom greatly should Grayscale receive the court victory and that bitcoin would shoot up in price following the verdict.

Already, the company is seeing the momentum lead to good things. The company’s shares have risen by more than 12 percent since the case was first submitted. CEO Michael Sonnenshein commented in a recent interview:

We walked out of the courtroom feeling encouraged and hopeful that those arguments would be persuasive to the court… This is a really misguided complaint. While I can appreciate that the new management team at Alameda from a fiduciary standpoint is looking to recover assets where they can for short-term wins, it certainly flies in the face of the work that’s being done to convert GBTC to an ETF, which we all know and all agree will unlock the most value for shareholders, including Alameda, and be the most optimal long-term product structure for GBTC.

Elliot Stein – senior litigation analyst at Bloomberg – also threw his two cents into the mix, stating:

Going into [the] argument, we thought the SEC was 60 percent favored, yet we now think Grayscale is 70 percent likely to win.

How Long Could Things Drag Out?

Despite all the positive news, Stein mentioned that a win in court doesn’t necessarily mean the ETF application will get the greenlight. He commented:

The court’s language will be key. Most likely, the court will send the case back down to the SEC for the agency to revisit its reasoning, including perhaps for it to better distinguish between language in previous orders that approved futures-based bitcoin ETFs and wording in the Grayscale rejection order. That could drag things out longer.

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