Alameda Research, an FTX affiliate co-founded by Sam Bankman-Fried and Tara Mac Aulay, has dropped its lawsuit against Grayscale Bitcoin Trust. FTX's crypto trading arm decided to scrap the case after GBTC was converted into a spot Bitcoin ETF.

Alameda Research's move to discard the lawsuit it lodged against the Bitcoin fund manager has cleared the way for its new management to sell its shares to recover funds. A lawyer working to regain customer funds confirmed Alameda's lawsuit-dropping move to Decrypt.

Alameda's Lawsuit vs. Grayscale

It was in March 2023 when Alameda Research brought Grayscale to court to force it to open investments that it claimed were inappropriately kept secret or concealed from its customers. Since FTX collapsed and filed for bankruptcy in late 2022, Alameda's new management has diligently worked on fund recovery to regain the customers' lost assets and cash. However, it decided to throw out the Grayscale suit this week.

The company alleged that GBTC had an "improper redemption ban," which hindered its recovery efforts. This restriction is said to be discouraging shareholders from redeeming shares in the GBTC and Ethereum Trusts. Moreover, Alameda originally sued Grayscale to seek injunctive relief against practices that it said were stamping out the value of assets belonging to FTX debtors.

Grayscale's Response to the Suit's Dismissal

Grayscale welcomed the development of the case and said that Alameda's voluntary dismissal just strongly emphasized its position that the lawsuit was entirely without merit. The disposal of the case came not long after FTX blew off over $1 billion in shares of GBTC.

Meanwhile, CoinDesk reported that Alameda Research's suit against Grayscale's chief executive, Michael Sonnenshein, and Digital Currency Group's (DCG) CEO, Barry Silbert, was also dropped. The latter is Grayscale's parent company, and both executives were named defendants in the original lawsuit.

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