Osprey ready to sunset its OTC Bitcoin trust by sale, merger or liquidation

Once the tiny competitor to Grayscale’s GBTC, Osprey is trading at a discount and ready to take extreme measures for recovery.

Osprey Bitcoin Trust announced on March 5 that it is in talks on its sale or merger. If the talks are fruitless, the trust will deregister and be liquidated in 180 days.

Osprey said it was aware that fractional units of the BTC trust were trading at a discount to the value of Bitcoin (BTC). It was considering options for “alternatives to maximize unitholder value.” The announcement was enough to give the unit price a significant boost, however. After closing at $15.98 on March 4, the unit reached $20.68 on March 5 before declining to $19.17 at the time of writing.

Osprey founder and CEO Greg King shared the company’s efforts to achieve positive financial results on X (formerly Twitter). The company filed Form 8-K with the United States Securities and Exchange Commission (SEC) on Jan. 11 to inform the agency of its intention to hold a tender for the purchase for cash of 20% of its units at the net asset value, minus taxes and fees. King wrote:

“To be clear, the ‘tender offer’ can also be considered a redemption program. US regs require it be filed as a ‘tender offer’. Any eligible $OBTC shareholder who follows the rules receives NAV less the fee at the conclusion of the tender as described.”

That tender proposal did not receive the reaction Osprey was hoping for, King wrote on X on Feb. 9:

“Hey all, we were very disappointed with the answers we got back on the tender. Makes no sense to us. Par for the course these days in Washington I guess…”

King did not elaborate on the answers he referred to but said Osprey was looking for “alternatives.”

Osprey was a competitor to the much larger Grayscale when it debuted its over-the-counter BTC trust in January 2021. It offered accredited investors exposure to BTC within brokerage accounts. The crypto winter took a heavy toll on the trust, which had laid off the majority of its employees by January 2023.

Related: Grayscale files for new spot Bitcoin ETF on NYSE Arca

Osprey sued Grayscale later in January 2023, claiming “Only because of its false and misleading advertising and promotion has Grayscale been able to maintain to date approximately 99.5% market share in a two-participant market.”

Osprey also offers over-the-counter Polkadot (DOT) and Solana (SOL) trusts and a private placement BNB Chain Trust (BNB).