- Grayscale Investments and Osprey Funds have reached a settlement in their two-year legal dispute over Bitcoin ETF advertising
- The lawsuit, initiated by Osprey in January 2023, accused Grayscale of misleading marketing practices regarding its Bitcoin Trust’s conversion to an ETF
- As part of the settlement, Osprey will withdraw its appeal, with all terms expected to be finalized within 45 days
After a protracted legal battle, Grayscale Investments and Osprey Funds last week agreed to settle their dispute concerning the promotion of Grayscale’s Bitcoin Trust. Osprey had alleged that Grayscale’s marketing misrepresented the certainty of converting its Bitcoin Trust into an ETF, potentially misleading investors. The settlement, filed in a Connecticut court on April 9, 2025, stipulates that Osprey will withdraw its appeal once the settlement terms are fully executed within the next 45 days.
Allegations of False Advertising
The conflict began in January 2023 when Osprey Funds filed a lawsuit against Grayscale Investments in the Connecticut Superior Court. The complaint alleged that Grayscale falsely advertised GBTC as a foregone conclusion regarding its conversion to a spot Bitcoin ETF despite knowing it was unlikely. This, Osprey claimed, gave Grayscale an unfair advantage and allowed it to dominate 99.5% of trust-based crypto products, despite charging higher fees.
Grayscale was involved in a legal battle with the Securities and Exchange Commission (SEC) over the conversion of GBTC into an ETF, with Grayscale emerging victorious in August 2023.
In February 2025, Judge Mark Gould ruled in favor of Grayscale, stating that Osprey’s claims were exempt under the Connecticut Unfair Trade Practices Act. Osprey contested this decision, filing a motion for reargument on February 10, arguing that the ruling was premature as it occurred before the completion of the discovery phase, and that it failed to consider differences in how deceptive advertising is treated under federal and state laws.
Both Parties Seek Settlement
The recent court filing indicates that both parties have agreed to settle the case and are in the process of finalizing the documentation and settlement terms. Once these steps are completed, Osprey will withdraw its appeal. The filing noted that all tasks can be done within 45 days, but it is uncertain whether a shorter extension would suffice.
This settlement concludes a significant legal confrontation in the cryptocurrency asset management sector, highlighting the intense competition and regulatory challenges within the industry. Grayscale’s successful conversion of GBTC into a spot ETF in January 2024, following SEC approval, marked a pivotal moment in the crypto investment landscape. The resolution of this lawsuit allows both Grayscale and Osprey to move forward, focusing on their respective strategies in the evolving digital asset market.
