(Bloomberg) — Grayscale Investment LLC has brought in a top legal mind from the former Obama administration as it weighs the possibility of the US Securities and Exchange Commission rejecting its application to convert its $20 billion Bitcoin trust into an exchange-traded fund.
The crypto asset manager announced Tuesday that is has hired Donald Verrilli, who worked as US solicitor general from 2011 to 2016, as additional legal counsel. Grayscale’s decision to hire Verrilli comes after the firm’s CEO Michael Sonnenshein said “all options are on the table” if the SEC rejects its proposal to turn Grayscale Bitcoin Trust (ticker GBTC) into a physically-backed ETF. The regulator has repeatedly denied similar applications. The SEC has until July 6 to make a final decision.
Read more: ‘All Options’ on the Table in Grayscale’s Fight for Bitcoin ETF
“In the name of being prepared for all possible outcomes, if one option is potentially bringing a lawsuit against the SEC, well what better person to have as a legal strategist than somebody who has represented the US government?” Craig Salm, the firm’s chief legal officer, said in an interview with Bloomberg.
Grayscale has argued that converting the trust into an ETF would likely bring the price of GBTC closer to its net asset value. GBTC currently trades at a 30% discount relative to NAV. Unlike an ETF, GBTC shares can’t be created and destroyed to keep up with demand shifts, making it effectively a closed-ended fund. Grayscale said last month the conversion would unlock as much as $8 billion in value for investors.
Verrilli has been working with the firm’s internal lawyers, as well as external lawyers at Davis Polk & Wardwell LLP, to get ready for possible litigation, including preparing substantive legal arguments and coming up with a procedural strategy, according to Salm.
Verrilli “has really strong background experience, especially in cases involving the Administrative Procedure Act,” Salm said.
During Verrilli’s tenure with the Obama administration, he successfully argued the government’s position in landmark Supreme Court cases on same-sex marriage and the Affordable Care Act. As solicitor general, Verrilli was the officer directly below the attorney general in the US Department of Justice. After he left the Obama administration, he opened the Washington, D.C. office of the law firm of Munger, Tolles & Olson LLP.
Strengthening the legal team reaffirms Grayscale’s “commitment to doing whatever we need to do to convert GBTC into an ETF,” Salm said.
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