The legal struggle between Osprey Funds and Grayscale is intensifying. Osprey Funds is asking a Connecticut judge to reconsider his decision in favor of Grayscale in a case concerning unfair trading practices.
Why is the Osprey Upset?
Osprey believes the judge ruled too early without fully reviewing all the evidence. They argue that this premature decision also improperly expanded legal protections for Grayscale. Osprey first filed a lawsuit against Grayscale and Delaware Trust Company in January 2023, accusing them of falsely advertising that the Grayscale Bitcoin Trust would definitely become an ETF, giving Grayscale an unfair market advantage.
Osprey’s Counterarguments
However, Osprey did not quietly accept the ruling. On February 10, they filed a motion to reconsider. They argue that their case isn't about securities transactions but about misleading advertising. Osprey claims that Grayscale's misleading promotions unfairly diverted customers away from them, affecting their business. They believe the judge's ruling overlooked key differences in how deceptive advertising is treated under different laws.
Osprey’s Next Move
Interestingly, a year after the initial lawsuit, the SEC finally approved Grayscale's Bitcoin Trust to convert into an ETF after Grayscale won a separate court case. Osprey even offered to settle its claims for nearly $2 million in July 2024, but Grayscale declined. Now, Osprey is pushing forward, arguing that this fight is about fairness in advertising and competition, not just about securities law. They are also working on converting their own Bitcoin Trust (OBTC) into an ETF after a failed acquisition deal with Bitwise. The outcome of this legal battle could significantly impact how crypto companies compete in the future.
As the legal proceedings between Osprey and Grayscale continue, the outcome could greatly influence future fair competition standards in the crypto industry.
