Grayscale Fights to Dismiss Osprey Lawsuit Claiming Misleading Crypto Adverts

On Wednesday, July 31, 2024, Grayscale Investments LLC filed a motion to dismiss a lawsuit brought against the firm by asset management company Osprey Funds LLC. In the lawsuit, Osprey alleges that Grayscale misled investors through false advertising about its services, hurting Osprey’s own business. However, Grayscale claims the lawsuit’s arguments are without merit.

Specifically, Grayscale filed a motion to strike Osprey’s amended complaint, arguing it fails to properly state a claim under the Connecticut Unfair Trade Practices Act (CUTPA). According to Grayscale, the amended complaint does not provide sufficient facts to establish a CUTPA case against the Delaware Trust Co. or Grayscale Bitcoin Trust, both of which are named as co-defendants. Grayscale also asserts that Osprey cannot demonstrate it suffered direct financial injury from the alleged false advertising, nor show ascertainable losses, as required by CUTPA.

Additionally, Grayscale argues Osprey has not proven the contested advertising took place within Connecticut’s borders. While Grayscale is headquartered in the state, the motion notes the complaint does not specify locations for the claimed violations.

Grayscale is seeking dismissal, claiming Osprey has already amended its pleading once without fixing issues. It believes granting further amendments would cause undue delays and costs. Osprey filed the original lawsuit in January 2023 over advertisements in which Grayscale reportedly stated it would convert its Bitcoin trust into an exchange-traded fund (ETF). However, Grayscale successfully converted the trust to an ETF this January after winning a related legal challenge.

For its part, Osprey offered to settle for $1.99 million but Grayscale has not yet responded. A Grayscale spokesperson reiterated the firm’s view that Osprey’s arguments lack foundation, especially since the trust conversion addressed one of the lawsuit’s core concerns.

Please contact BlockTribune for access to a copy of this filing.