- DCG and Grayscale caught political attention in an ironic manner, according to analyst Andrew’s tweet.
- Congressman Sherman condemned GBTC’s high fees and ties to DCG in a scathing letter to the SEC.
- Sherman raised concerns about Grayscale’s lack of independent directors and high BTC-based fees.
X 3 founder Andrew spoke about Digital Currency Group (DCG) and Grayscale’s appearance in the political landscape in his tweet earlier today. In a recent update, Andrew shared that DCG and Grayscale have entered the “political radar in a new and somewhat ironic way.”
UPDATE: DCG and @Grayscale are now on the political radar in a new and somewhat ironic way. @BradSherman (and his office) pens a scathing letter to the @SECGov and Gary Gensler hammering $GBTC, it’s outrageous fees and incestious relationship to DCG. pic.twitter.com/xOpnJlhS1q— Andrew (@AP_Abacus) May 12, 2023
Alongside, Andrew attaches a “scathing letter” the US Representative Brad Sherman and his office wrote to the U.S. Securities and Exchange Commission (SEC) and Chairman Gary Gensler, condemning $GBTC for its exorbitant fees and questionable ties to DCG.
In the letter dated May 11, the Congressman asserted that Grayscale exhibited a profit-driven approach, regardless of the adverse impact on the substantial number of retail investors, surpassing 850,000, who presently find themselves with restricted access to their assets within GBTC.
As per Sherman’s statement, the issuance of additional GBTC shares by Grayscale has had a substantial influence on the shares trading at a discount of over 40% compared to their net asset value. Moreover, according to data from ycharts, the discount has currently reduced to 39.76% at the time of this press release.
Sherman emphasized that such actions raised apprehensions among the numerous GBTC investors, underscoring the necessity of SEC intervention to safeguard investor interests.
Meanwhile, Grayscale, citing Regulation M, declined investors’ requests for redemptions. The company pointed out that the rule prohibits simultaneous sales and redemptions of the same security.
Sherman raised a series of inquiries to the SEC concerning Regulation M and its potential impact on shareholder redemptions. Additionally, he questioned Grayscale’s absence of an independent director on its board and expressed concerns regarding the perceived high 2% fee based on Bitcoin.
The Congressman urged the financial regulatory body to provide responses to these queries by May 15, seeking clarification on these matters.
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