NEW YORK, Nov. 8, 2017 /PRNewswire/ — Grayscale Investments, LLC, the sponsor (the “Sponsor”) of the Bitcoin Investment Trust (OTCQX: GBTC) (the “Trust”), announced today an update on the planned distribution of the Bitcoin Cash currently held by the Trust to shareholders of record (“Record Date Shareholders”) as of the close of business on November 6, 2017 (the “Record Date”).
In connection with the Bitcoin Cash fork, the Trust incurred certain extraordinary expenses. These expenses primarily relate to consultations with the Trust’s professional advisors and third-party service providers to determine an appropriate approach to handling the Bitcoin Cash that maximized shareholder value while ensuring the Trust’s continued treatment as a grantor trust for U.S. federal income tax purposes. Pursuant to the terms of the Trust Agreement, the Trust’s extraordinary expenses are payable in Bitcoin and other virtual currency, such as Bitcoin Cash, then held by the Trust.
The Trust currently holds approximately 173,014 coins (or units) of Bitcoin Cash, or approximately 0.09258535 coins of Bitcoin Cash per share based on 1,868,700 shares of the Trust outstanding as of the date hereof and expected to be outstanding as of the Record Date. In lieu of using Bitcoin to pay the extraordinary expenses incurred in connection with the Bitcoin Cash fork, the Trust will transfer a portion of the Bitcoin Cash held by the Trust to the Sponsor to pay such extraordinary expenses on the Trust’s behalf prior to the distribution to the Record Date Shareholders on the Record Date. As a result, the distribution to the Record Date Shareholders on the Record Date is expected to be approximately 0.09231058 coins of Bitcoin Cash per share. The cash ultimately received by the Record Date Shareholders from the post-distribution sale of the distributed Bitcoin Cash on their behalf will be reduced by any administrative and other reasonable expenses related to the eventual sale of the distributed Bitcoin Cash that are incurred by Grayscale Investments, LLC in its capacity as agent of the Record Date Shareholders (the “Agent”) and not in its capacity as sponsor of the Trust. The Agent may use an affiliated dealer to facilitate the sale of Bitcoin Cash. Any such affiliated dealer would be expected to earn a customary markup or other customary compensation for its services.
Bitcoin Cash currently trades in multiple venues, which have reported widely fluctuating values for Bitcoin Cash since its introduction on August 1, 2017, and as a result of this volatility it is not possible to predict the value of Bitcoin Cash to be distributed as of the Record Date. On November 3, 2017, venues were reporting intraday trading prices for Bitcoin Cash from as high as approximately $688 per coin to as low as approximately $595 per coin (or their approximate equivalents in other fiat or digital currencies), although there is no assurance that prices in this range (before deduction of any related expenses) would have been realizable had the Bitcoin Cash currently held in the Trust been liquidated on such date. As a result, there can be no assurance as to the price or prices for Bitcoin Cash that the Agent may realize, and the value of Bitcoin Cash may increase or decrease after any sale of Bitcoin Cash by the Agent.
Record Date Shareholders are advised to consult with their advisors as to the tax consequences of the foregoing.
About Grayscale Investments, LLC
Founded in 2013, Grayscale Investments, LLC is a wholly-owned subsidiary of Digital Currency Group, Inc., which builds and supports bitcoin and blockchain companies by leveraging its insights, network, and access to capital. A trusted authority on digital currency investing, Grayscale provides market insight and investment exposure to the developing digital currency asset class. Grayscale is the sponsor of the Bitcoin Investment Trust and Ethereum Classic Investment Trust.
Grayscale Investments, LLC is headquartered in New York City. www.grayscale.co