Grayscale and Osprey Settle Legal Battle Over Bitcoin Trust Marketing Dispute

Grayscale and Osprey reached a settlement to end their long legal dispute over Bitcoin Trust marketing.

The settlement ends two years of legal action between Grayscale and Osprey over ETF conversion claims.

Court records show Osprey will withdraw its appeal once the settlement terms are fully completed.

Digital asset managers Grayscale Investments and Osprey Funds have agreed to settle their extended legal battle. The dispute centered on alleged deceptive marketing practices involving Grayscale’s Bitcoin Trust.

A recent court filing on April 9 revealed both parties are finalizing the settlement documents. The Connecticut Appellate Court motion noted they expect to complete these tasks within 45 days. Once done, Osprey will withdraw its appeal, officially closing the case.

Background of the Legal Dispute

Osprey filed its lawsuit against Grayscale at the Connecticut Superior Court during January 2023. According to Osprey, Grayscale misled its investor base regarding the future transformation of its Bitcoin Trust into an exchange-traded fund (ETF).

The Bitcoin trust operated by Osprey had lower market penetration compared to Grayscale's operations. The company alleged Grayscale breached Connecticut's laws against unfair business practices because it advertised an upcoming conversion guarantee to investors although regulatory risks remained uncertain.

Grayscale received approval from the U.S. Securities and Exchange Commission in January 2024 to transform its Bitcoin Trust into a spot ETF. The SEC took this decision after a previous court judgment from August 2023 instructed them to revisit Grayscale's application.

Escalation of the Case

After the SEC approval, Osprey amended its lawsuit, asserting Grayscale had exaggerated its ETF conversion progress. Court records show Osprey believed Grayscale’s claims gave it an unfair advantage in the market.

However, the case turned in Grayscale’s favor on February 7, 2025. Judge Mark Gould ruled that Connecticut's Unfair Trade Practices Act does not apply to securities disputes. This decision came after more than two years of legal proceedings between the two asset managers.

Before the judgment, Osprey had offered a settlement proposal in July 2024 worth around $2 million. Grayscale declined that offer at the time.

Settlement Terms Remain Undisclosed

The current settlement terms have not been made public. It remains unclear whether either company admitted any liability as part of the agreement. Both firms have yet to release any official statements regarding the resolution of the case. The settlement brings an end to one of the more notable legal confrontations in the crypto asset management industry.

Osprey continues its efforts to convert its own Bitcoin trust into an ETF. Meanwhile, Grayscale’s Bitcoin Trust remains among the largest Bitcoin investment products in the United States.