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Grayscale and Osprey Settle Long-Running Legal Feud Over Bitcoin ETF Marketing
After more than two years of legal tension, digital asset managers Grayscale Investments and Osprey Funds have decided to settle their differences–literally. A recent court filing from Connecticut states the fact that both firms came to a deal that ends a lengthy legal battle over marketing Bitcoin products for investment.
Following a ruling on April 9 in the Connecticut Appellate Court, both parties are required within the 45 days allotted to them to finish the litigation and resolve the case for good.” As soon as the appeal was filed, the parties managed to find a settlement of the case” is a sentence in the motion that was sourced from Law360. Companies must now finish documents and comply with the conditions of the agreement before the appeal will be deemed to be dismissed.
The Backstory: A Bitcoin Trust Tug-of-War
The legal drama started in January 2023 when Osprey launched a legal action accusing Grayscale of deceiving investors regarding the probability that its wildly famous Bitcoin Trust (GBTC) would change into an exchange-traded fund (ETF).
Osprey is headquartered within Fairfield, Connecticut, operates its own Bitcoin trust (OBTC)–a directly competing entity with Grayscale’s GBTC but it has a lesser market part. The company claimed Grayscale’s business practices were in violation of the state’s Unfair Trade Practices Act (CUTPA) which claimed the company created a false perception of security regarding the GBTC’s ETF conversion.
The matter took on a fresh direction in January 2024, when Grayscale received long-awaited permission from the U.S. Securities and Exchange Commission (SEC) to transform GBTC into an actual spot Bitcoin ETF and uplist it. After this huge regulatory win, Osprey amended its lawsuit to claim that Grayscale did not accurately reflect the progress it had made.
In the meantime, Osprey’s ETF goals in the direction of OBTC are still in the works.
The Court’s Ruling – and an Attempted $2M Settlement
On the 7th of February, 2025, Superior Court Judge Mark Gould gave Grayscale victory by awarding the motion for summary judgment. This effectively ruled out Osprey’s claim. Judge Gould ruled that CUTPA does not apply to cases involving securities, which took the legal sailings of Osprey.
The court files reveal that Grayscale has submitted counterclaims, claiming Osprey committed similar violations, however, they were dropped voluntarily before the judgment was entered.
Also worth mentioning is that Osprey has previously attempted to settle the dispute in July 2024. According to reports, they were providing around 2 million dollars. Grayscale at the time was not interested.
The two companies are returning to the table for negotiations. The new settlement is the first time they’ve officially reached an agreement to settle the issue. But the financial terms and the possibility of admitting responsibility haven’t been disclosed.
So, What’s Next?
All attention is focused on the 45-day deadline within which each party must finish the documents and implement the terms that were agreed to. In the meantime and the appeal Osprey has filed in the wake of February’s ruling is still technically in force.
There is no indication that Grayscale or Osprey has released any public statements about the settlement. Demands for information, including Decrypt’s Decrypt, yet to be unanswered.
Why This Matters
The case goes beyond a dispute between two companies. It highlights the fierce competition and the legal complexities that surround the race to create cryptocurrency ETFs. Grayscale is the dominant competitor in this space and has achieved its ETF objectives. Osprey, however, continues to work on gaining ground.
The industry grows, and increasing numbers of traditional investors invest in cryptocurrency via ETFs – the principles of fairness and transparency marketing will only become more crucial.
There’s one thing for certain: The cryptocurrency ETF market is heating up. This settlement could help clear the path to the coming round of ETF competition.
