On June 29, Donald B. Verrilli Jr., a partner at Munger, Tolles & Olson, filed a petition for review of the SEC's order with the United States Court of Appeals for the District of Columbia Circuit on Grayscale's behalf. In its Oct. 11 opening brief, Grayscale argued that the SEC had arbitrarily treated a proposed spot bitcoin ETP differently from the way it treats bitcoin futures ETPs.
Judge Neomi Rao, part of a three-judge panel that heard oral arguments in the case Tuesday, asked Emily True Parise, senior appellate counsel for the SEC, that if the court sided with Grayscale would the SEC approve a spot bitcoin product or would it go back on its approval of the futures product.
Ms. Parise replied that she was unable to speak to what the commission would do.
Earlier during the proceedings, Judge Rao asked about an SEC order relating to the Teucrium Bitcoin Futures Fund.
"What about the fact that the commission in the Teucrium order recognizes that the futures prices are influenced by the spot prices," Judge Rao asked, adding that the commission concluded in approving futures ETPs that any fraud in the spot market could be adequately addressed by the fact that the futures market is regulated. That was a conclusion the SEC drew just a few months before it denied spot bitcoin ETPs, she said.
Ms. Parise said she didn't think that was quite what the SEC concluded in the Teucrium order.
She pointed to the relationship in the Teucrium situation between the underlying futures market and the regulated market with which the exchange had a surveillance sharing agreement.
Separately, Alameda Research on Monday filed a lawsuit against Grayscale Investments and other defendants in the Delaware Court of Chancery.
"This action arises out of defendants' brazen abuse of their control over nearly $19 billion of digital assets held in two trusts to enrich themselves at the expense of trust shareholders," Alameda's complaint alleges.
Alameda is a shareholder in both of the trusts, the complaint said. Though previously part of the cryptocurrency hedge fund and trading enterprise run by Sam Bankman-Fried, Alameda is now a debtor in possession that has filed for relief under chapter 11 of the U.S. Bankruptcy code, the filing said.
In addition to Grayscale, Alameda's complaint also named Grayscale CEO Michael Sonnenshein, Digital Currency Group and Barry Silbert as defendants. Mr. Silbert is the founder and CEO of DCG, Grayscale's parent company, the complaint said.