Osprey Funds has challenged a recent Connecticut court ruling that favored Grayscale Investments in their ongoing $2 million unfair trade dispute over the Grayscale Bitcoin Trust (GBTC).
On February 10, Osprey submitted the motion to Connecticut’s Superior Court, arguing that Judge Mark Gould’s February 7 ruling was premature as it was issued before the close of discovery.
The firm also claimed that the judge wrongly broadened the scope of an exemption under the Connecticut Unfair Trade Practices Act (CUTPA).
Osprey’s Allegations Against Grayscale
Osprey originally filed the lawsuit in January 2023, accusing Grayscale and Delaware Trust Company—the trustee of GBTC—of engaging in false advertising.
The firm alleged that Grayscale misled investors by promoting its plan to convert GBTC into an exchange-traded fund (ETF) as a certainty, despite knowing regulatory approval was unlikely at the time.
Judge Gould ruled in favor of Grayscale on February 7, 2024, stating that Osprey’s claims involved the buying and selling of securities, which is exempt from CUTPA.
His decision also noted that, at the time of the lawsuit, Osprey and Grayscale were the only two firms offering trust-based Bitcoin investment products with ticker-based exposure.
However, a year later, in January 2024, the Securities and Exchange Commission (SEC) approved Grayscale’s ETF conversion after the firm won a lawsuit against the regulator.
In July 2024, Osprey sought to settle its claims against Grayscale for just under $2 million, an offer that Grayscale rejected.
In its February 10 motion, Osprey argued that the court misinterpreted the differences between how the Federal Trade Commission (FTC) and Connecticut courts handle deceptive advertising in securities-related cases.
Osprey emphasized that the CUTPA exemption for securities transactions has never been applied to cases of deceptive advertising between competitors, merely because they operate in the same industry.
The firm argued that Grayscale’s misleading marketing practices harmed its business by diverting market share away from Osprey.
“Osprey and Grayscale weren’t involved in a securities transaction with each other,” the filing stated.
Instead, Osprey argued that its case was about deceptive advertising and unfair competition, not a securities dispute.
Osprey Moves Forward With Own Bitcoin ETF
Despite its legal battle, Osprey is moving forward with its own Bitcoin ETF ambitions.
Last month, the firm notified the SEC of its intent to convert its Osprey Bitcoin Trust (OBTC) into a spot Bitcoin ETF. The development came after Osprey’s planned acquisition by Bitwise fell through.
On Jan. 21, Osprey Funds and REX Shares filed regulatory plans to offer ETFs for meme coins, including DOGE, TRUMP, and BONK.
Just recently, Tuttle Capital Management filed applications for ten cryptocurrency-based leveraged ETFs, including funds tied to popular meme coins.
Analysts suggest the filings are part of a broader strategy to test the boundaries of an SEC under Trump-era crypto-friendly regulators.
The post Osprey Funds Appeals Court Decision Favoring Grayscale in $2M Bitcoin Fund Case appeared first on Cryptonews.
