The so-called “improper redemption ban” on shares of Grayscale Investments’ Grayscale Bitcoin Fund (GBTC) is now a thing of the past, with the fund’s conversion into an exchange-traded fund (ETF).

The ability to redeem funds kicked in when GBTC began trading on the New York Stock Exchange (NYSE) as an ETF earlier this month, and investors have waited no time in cashing out, with the fund seeing $2.2 billion worth of outflows since.

Alameda Research, the collapsed crypto trading firm which sued Grayscale last March over its high fees and prevention of redemptions, has now dropped the lawsuit voluntarily, according to a court filing on Monday.

Unchained reported earlier that Alameda’s sister company FTX was responsible for close to $1 billion of the outflows from GBTC, with the bankrupt crypto exchange liquidating its entire holding of 22 million GBTC shares. 

At the time of the initial lawsuit, FTX’s new CEO John Ray III said that the bankruptcy estate’s goal was to maximize recoveries for creditors and unlock value that was “currently being suppressed by Grayscale’s self-dealing and improper redemption ban.”

In a motion filed in August 2023, Alameda said it was in the process of adding more plaintiffs to its lawsuit, claiming at the time that more than 45 parties had already indicated their willingness to participate. 

“Alameda’s voluntary dismissal underscores Grayscale’s position that this legal action was entirely without merit,” said a Grayscale spokesperson in a statement to The Block earlier today.

Meanwhile, the outflows from GBTC have had a profound effect on the price of Bitcoin, which is now trading under $40,000 after losing close to 7% in the last week. Still, some market participants are optimistic that the selling pressure will ease off after FTX’s GBTC holdings are liquidated.