Bailey’s lawyers have also argued that Grayscale could allow investors to cash out without dealing with the SEC at all. But it’s not that simple either, says Sonnenshein, because of a cease and desist letter issued by the SEC in 2016 that prevented the trust from issuing new shares and allowing shareholders to cash out simultaneously.

The complexity of the securities laws that apply to trusts like GBTC creates opportunity for disagreements of this kind. “It’s a spider’s web,” says Andrew Parish, a veteran crypto founder with close relationships to parties across the industry. “It’s a mess that can hardly be understood by anyone other than accountants and lawyers.”

Contenders to take over from Grayscale have emerged from the ranks of the rebellion, including McClurg’s Valkyrie. Bailey also has skin in the game: Not only does his hedge fund hold $2.5 million in GBTC shares, but his companies also have a combined $113,000 stake in Valkyrie. If Valkyrie were to succeed in its bid to take on the management of GBTC, it would absorb hundreds of millions of dollars in annual management fees, and Bailey would profit indirectly.

But Bailey also says he holds a stake in DCG, Grayscale’s parent company, that’s greater in value than his Valkyrie position, so he also stands to lose if Grayscale is forced out. “This started because we were frustrated our fund had lost some money on its [GBTC] investment,” says Bailey, “But once we started to receive comments from people about how they had been affected, it became something else. [We realized that] people need immediate relief.”  

While Sonnenshein says Grayscale is always willing to hear investors out, he has reservations about the credibility of the RedeemGBTC campaign, which is run almost exclusively through Bailey’s personal Twitter account and a simple website.

“We always appreciate the opportunity to engage with any and all of our investors,” says Sonnenshein. “[But] it’s tough to take seriously a Twitter account as a standalone, as compared to the nearly 1 million investor accounts we have across the US … Anyone could go to the website and say they have one share or 10 million shares—and there’s no verifying it.”

But RedeemGBTC is not the only group Grayscale has to contend with. In December, investment firm Fir Tree filed a lawsuit against Grayscale in an effort to force the firm to hand over information that might assist in an investigation into potential mismanagement and conflicts of interest. The lawsuit asserts that Grayscale’s “shareholder-unfriendly actions” have harmed Fir Tree customers that hold GBTC shares, many of which are pension funds.

This was followed in late January by a lawsuit filed by asset management firm Osprey Funds claiming Grayscale made “false and misleading statements in its advertising and promotion” that gave investors the impression that GBTC’s conversion into an ETF was a “foregone conclusion.” Osprey also claims Grayscale’s approach to advertising has made it impossible for competitors, including itself, to accrue meaningful market share.