Grayscale Litecoin Trust - LTCN stock

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OTC Symbol: LTCN | OTC Tier: OTCQX U.S.

About

Description

Grayscale Litecoin Trust [OTCQX: LTCN] is an investment company that solely and passively invests in LTC. It accords investors with the secure opportunity to invest in LTC in the form of security while evading challenges involved in the direct buying, holding, and safekeeping of LTC. Founded in 2013, the company has established itself as one of the largest digital currency asset managers globally. Since its inception, Grayscale has launched 17 digital asset products. The company is domiciled in the United States.

Business Operations

Grayscale leverages its deep expertise to become the world’s largest digital currency asset manager. The company has consistently evolved in its life cycle supplying investors, allocators, and advisors with secure and convenient exposure to digital currency asset investing exposure via its suite of investment products. Its fleet incorporates single-asset, diversified, and thematic assets. Each of the company’s digital asset products undergoes four significant stages before eventually being converted to an ETF. The steps include launching the product as a private placement, obtaining a public quotation on a secondary market, becoming SEC reporting, and converting the underlying asset to an ETF. As of April 18, 2023, the company had $26,065,795,748 of total assets under management.

Grayscale Litecoin Trust generally holds Litecoin and periodically issues shares in minimum baskets of 100 Shares in exchange for LTC. So far, the Trust does not operate a redemption program due to regulatory approval shortage and approval of the sponsor. Its investment objective is for the share value to mirror the LTC value held by the Trust, less its expenses and liabilities. Grayscale Investments LLC, a Digital Currency Group, Inc. subsidiary, is the Trust’s acting sponsor. Coinbase Custody Trust Company, LLC, which delivers third-party services is the Funds custodian while Continental Stock Transfer & Trust Company acts as the Trust’s transfer agent.

Product Pipeline

Grayscale exposes investors to crypto, brokerage accounts in the form of regulated securities, and access to other digital assets via tax-advantaged accounts such as IRAs, Roth IRAs, and Self-Directed IRAs. The company’s single-asset class products include Grayscale Bitcoin Trust, Grayscale Ethereum Trust, Grayscale Ethereum Classic Trust, and Grayscale Litecoin Trust, among others. Its diversified class of assets includes Grayscale Decentralized Finance Fund, Grayscale Digital Large Cap Fund, and Grayscale Smart Contract Platform Ex-Ethereum Fund.

Strategy

The firm pioneers the business model that targets digital currency asset investors who prefer a passive form of investing. It uses its experience trading in the digital asset market to generate revenue which is distributed to shareholders in the form of dividends and bonuses.

Vision

With the investment landscape evolving, Grayscale believes that investors need financial investments that are time-resilient. The company aims to provide investors with future-focused investment opportunities that will help them build robust financial legacies in the present.

Corporate and Industry Developments

After its First Quarter 2023 reviews, Grayscale Investments updated the Fund Component weightings for each commodity. There were no variations in terms of the addition or subtraction of tokens from the Digital Large Cap Fund. As of April 5, 2023, fund components and weightings of the Digital Large Cap Fund were as follows: Bitcoin (BTC), 67.22%, Ethereum (ETH), 28.82%, Cardano (ADA), 1.69%, and Solana (SOL), 0.99%. The company also increased its DeFi Fund portfolio through the sale of certain existing Fund Components in their respective weighting proportions. Compound (COMP) was extracted from the CoinDesk DeFi Select Index and DeFi Fund as a result. The resulting DeFi Fund’s Fund Components baskets were aligned as follows: Uniswap (UNI), 59.61%, Aave (AAVE), 13.92%, MakerDAO (MKR), 8.44%, Synthetix (SNX), 8.61%, and Curve DAO Token (CRV), 9.42%.

Leadership

Michael Sonnenshein, CEO

• Has been the CEO since January 2021 and a board member since February 2020
• Has served in significant positions in established companies including J.P Morgan as an associate, Barclays as an analyst, and The Bank of America as an analyst
• Holds a Master of Business Administration (MBA) from NYU Stern School of Business and a Bachelor of Business Administration from Emory University - Goizueta Business School

Legal Issues

Alameda Research Ltd, an FTX debtor affiliate, filed a lawsuit against Grayscale Investments LLC, its owners Digital Currency Group, the CEO Michael Sonnenshein, and Barry Silbert on March 6, 2023. The case was filed in the Court of Chancery, State of Delaware. According to the complaint, Grayscale has siphoned over $1.3 billion in exorbitant management fees for the past two years which breaches the Trust agreement. Alameda claims that Grayscale has hidden behind lame excuses to bar shareholders from redeeming their shares for the longest time, a move that has seen the Trust’s shares trade at an estimated 50% discount to their net asset value. The company alleges that if Grayscale stopped blocking redemptions and reduced its fees, the FTX debtors' shares would increase by approximately 90% of their current value. Grayscale denied the allegations terming them as “misguided”.

In June 2022, Grayscale prompted a lawsuit against the US Securities and Exchange Commission after Sec turned down the group’s proposal to convert its $40bn trust into an exchange-traded fund on Wall Street exchanges. SEC rejected Grayscale’s bid stating that the Bitcoin Trust did not satisfy consumer protection requirements, including pre-engineered measures to prevent manipulative and fraudulent acts and practices. The rejection saw bitcoin prices drop by 3.4 percent to a record low of $19,400.

On June 29, 2022, Grayscale, through Donald B. Verrilli, Jr., the company’s Legal Strategist tabled a petition for review to contest the Securities and Exchange Commission’s (SEC) decision. Grayscale is in the midst of the appellate phase and estimates one year, more or less, for the court to deliver a final decision.