Grayscale,Osprey Settle Legal Dispute Over Marketing Practices

Grayscale Investments and Osprey Funds, two prominent digital asset managers, have resolved their protracted legal dispute over marketing practices. The settlement agreement was reached after a motion was filed with the Connecticut Appellate Court on April 9, indicating that the parties have 45 days to finalize the settlement documentation. This development follows Osprey's appeal of a February decision that favored Grayscale.

The legal battle began in January 2023 when Osprey filed a lawsuit alleging that Grayscale had misled investors about the prospects of its Bitcoin Trust (GBTC) converting to an exchange-traded fund (ETF). Osprey, based in Fairfield, claimed that Grayscale violated Connecticut's Unfair Trade Practices Act (CUTPA) through deceptive marketing practices. The dispute intensified after Grayscale received SEC approval to convert its Bitcoin Trust to an ETF in January 2024, following a lengthy regulatory battle. Osprey subsequently amended its complaint, asserting that Grayscale had misrepresented its progress toward ETF conversion, a process that Osprey is still working on for its own Bitcoin trust, OBTC.

Superior Court Judge Mark Gould granted summary judgment to Grayscale on February 7, 2025, ruling that CUTPA did not apply to securities cases. This judgment came after over two years of legal proceedings, which included counterclaims by Grayscale alleging similar unfair practices by Osprey. These counterclaims were voluntarily dropped before the summary judgment. Prior to the February ruling, Osprey had attempted to settle the case in July 2024 for approximately $2 million, but Grayscale declined the offer. The financial terms and other conditions of the current settlement agreement have not been disclosed, and it remains unclear whether the agreement includes any admission of liability by either party. Representatives from both companies have not issued public statements regarding the current settlement terms.