Crypto: Grayscale Won’t Admit Defeat to SEC

Tue August 30, 2022 ▪ 2:00 p.m. ▪

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Of all the fights the SEC has waged against US stock exchanges, there has never been a permanent knockout. We all know Ripple that has never admitted defeat to the US regulator. For his part, Grayscale shows great stamina despite his setbacks with this attitude. Lately, the digital asset manager has shown that he is not ready to give up, despite the series of uppercuts the team has inflicted on Gary Gensler.

Grayscale comes to the rescue of Stellar (XLM), Zcash (ZEC) and Horizen (ZEN)

More and more players in the crypto universe are currently looking at the measures the SEC will take as part of its aggressive policy on exchanges. Didn’t we learn early this August that she’s going to be leading some sort of “witch hunt” to clean up this world with a bright future?

When it comes to grayscale, it’s time to dodge and counter-attack. Reality check: The US regulator recently questioned the digital currency asset manager about the “ securities law analysis of three less popular tokens. This study specifically concerns the viability of XLM, ZEC and ZEN. The latter are considered cryptocurrency trusts suitable for brokerage accounts.

Differences between Grayscale’s ZEC filing in May (left) and June (right), where the SEC question line can be seen.

In response, Grayscale Investment LLC leaked the actual investigation to the internet. The company later admitted to responding to members of the SEC’s Corporate Finance division in the same document. Finally, she acknowledged that ZEC, XLM and ZEN” can presently constitute a certainty, based on the facts as they exist today “.

In fact, Grayscale plans to get off the hook by declaring that these three relatively small trusts have the same legal standing as other securities. Any idea of ​​considering them as titles will therefore be discarded for good.

The SEC never had the last word

We are aware that Grayscale already has a history with the US Securities and Exchange Commission. One of the key twists and turns in their exchange of blows made headlines last June. At the time, the digital wealth manager faced a rejection of its plan to convert its GBTC fund, the Bitcoin Trust, into an ETF.

The reason for this rejection? Gary Gensler, the agency’s current president, saw no digital asset that represents the status of ” raw material other than bitcoin. It was difficult for him to come up with new rules for a cash bitcoin ETF. In addition, at the time, Grayscale had shown no willingness to address the agency’s concerns about market manipulation. It will therefore be difficult for her to protect investors in this case.

Several crypto investors seem sick of this decision. Grayscale bosses later went to court by filing a motion challenging the SEC’s decision.

[La SEC] does not apply consistent treatment to comparable investment vehicles and acts arbitrarily and erratically in violation of the Administrative Procedure Act and the Securities Exchange Act of 1934 ‘, Donald B. Verrilli Jr, Grayscale’s chief legal strategist, hammered on the occasion.

Moreover, if there are many other companies that are used to lawsuits against the Securities and Exchanges Commission, Ripple is one of them. Admittedly, their duel did indeed start several years ago, but for now the two don’t seem to want to give themselves a break. As it goes, we can safely say that the two tied.


The SEC can show its claws against cryptocurrency exchanges, but it should also know that on the other hand, there is no shortage of suitable replicas. This is where the need for an open showdown against crypto firms can be questioned. Is this the only way that will lead to regulation of the sector?

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