Grayscale and Osprey End 2-Year Legal Fight Over Bitcoin ETF Promotion

Two of the most prominent players in the crypto investment space—Grayscale Investments and Osprey Funds—have reached a settlement in a long-standing legal dispute over the promotion of Grayscale’s Bitcoin ETF. The case, which centered on allegations of misleading advertising and anti-competitive behavior, is expected to conclude formally in the coming weeks.

According to an April 9 filing in the Connecticut Appellate Court, both parties are finalizing the documentation and terms of the agreement. Once completed, Osprey will withdraw its appeal, effectively bringing the two-year legal battle to a close.

“Soon after this appeal was filed, the parties reached a settlement of this case,” the court motion read. “It is expected that all these tasks can be done within 45 days.

Background: A Battle for ETF Market Share

The lawsuit was originally filed by Osprey Funds on January 30, 2023, in Connecticut Superior Court. Osprey accused Grayscale of violating state laws by using deceptive marketing tactics to dominate the over-the-counter Bitcoin trust market. At the time, Osprey claimed to be Grayscale’s only competitor in that space.

Central to the case was Grayscale’s promotion of its flagship product, the Grayscale Bitcoin Trust (GBTC), which the company claimed would soon convert into a spot Bitcoin exchange-traded fund (ETF). Osprey argued that this messaging misled investors into believing the ETF conversion was imminent and guaranteed—despite the lack of regulatory approval at the time.

That approval eventually came in January 2024, when the U.S. Securities and Exchange Commission (SEC) greenlit the conversion, allowing GBTC to begin trading as a spot ETF on the NYSE Arca exchange. An earlier ruling in August 2023 had compelled the SEC to revisit its initial rejection of Grayscale’s application, paving the way for the eventual approval.

Legal Setback for Osprey

In February 2024, Judge Mark Gould ruled in favor of Grayscale, stating that Osprey’s allegations were exempt from the Connecticut Unfair Trade Practices Act (CUTPA). Osprey filed a motion for reargument shortly after, claiming the court had issued its decision prematurely—before the close of discovery, the key evidence-gathering phase of the lawsuit.

Osprey also challenged the ruling on the grounds that it failed to consider differences in how deceptive advertising is treated by the Federal Trade Commission versus Connecticut courts.

Though specific terms of the settlement have not been made public, the agreement ends a notable legal conflict between two firms that vied for early dominance in the crypto ETF market. Grayscale's GBTC remains one of the largest Bitcoin investment products in the United States.