FTX Sold $1B Of GBTC, Explaining Part Of Grayscale Outflows

Since Grayscale Bitcoin Trust GBTC was transformed into an exchange-traded fund (ETF) earlier this month, $1 billion of the $2 billion in outflows were offloaded by FTX's bankruptcy estate. 

What Happened: According to data reviewed by Coindesk, FTX offloaded 22 million shares, reducing its GBTC stake to zero. The sale of its shares was valued at nearly $1 billion.

FTX, like other large crypto trading entities, had previously capitalized on the price difference between Grayscale trust shares and the net asset value of the underlying Bitcoin.

As of Oct. 25, 2023, FTX held 22.3 million Grayscale Bitcoin Trust shares, valued at $597 million, according to a Nov. 3 filing.

On Jan. 11, the day Grayscale's Bitcoin ETF commenced trading on NYSE Arca, the value of FTX's holdings rose to approximately $900 million.

FTX's investments included shares in five Grayscale trusts and nearly 3 million shares in a statutory trust managed by Bitwise, held in a brokerage account at ED&F Man Capital Markets, now known as Marex Capital Markets Inc.

Marex and Galaxy Digital, assisting with the sale of FTX's bankruptcy estate assets, declined to comment.

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Why It Matters: The conversion of Grayscale Bitcoin Trust to an ETF came as the U.S. Securities and Exchange Commission (SEC) greenlit the trading of several spot Bitcoin ETFs on Jan. 11, following prolonged delays.

The Grayscale fund, which had been operating for a decade as a closed-end fund, amassed nearly $30 billion in assets before its conversion.

Simultaneously, the SEC approved 10 new Bitcoin ETFs.

Despite the launch of new funds by major players like BlackRock and Fidelity, Grayscale Bitcoin Trust has experienced substantial withdrawals.

Data reviewed by CoinDesk indicates that FTX was a major contributor to this trend, reducing its Grayscale Bitcoin Trust stake to zero with the sale of its shares valued at nearly $1 billion.

Bitcoin's BTC/USD price has experienced a notable decline since the approval of these ETFs, contrasting with the earlier optimism surrounding the SEC's decision.

Bitcoin ETFs were anticipated to offer an easier investment avenue for the general public, leading to optimistic predictions about Bitcoin's price.

What's Next: In a related development, Alameda Research, a trading firm associated with FTX, voluntarily withdrew a lawsuit that alleged Grayscale charged exorbitant fees.

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