Crypto lender BlockFi now holds over 5% of Grayscale's Bitcoin Trust shares

Investments • October 27, 2020, 12:18PM EDT
UPDATED: July 14, 2021, 11:50AM EDT
The Block

Crypto lender BlockFi has purchased a considerable stake in Grayscale's Bitcoin Trust (GBTC), public records show.

The lending firm's holdings now represent a 5.07% ownership of the trust, according to a new filing with the Securities and Exchange Commission (SEC). The SEC requires that companies report anything over a 5% ownership of another company using form 13-G.

BlockFi's filing is signed on October 26 and reports the October 15 purchase of 24,235,578 shares from the Trust. According to Grayscale's most recent annual filings, each share is worth 0.0001 BTC, meaning BlockFi's purchase is about 24,235.578 BTC. At current market price, that's $328,040,666.02.

BlockFi CEO Zac Prince says the move is part of serving its own customers as a crypto lender.

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“There are lending markets alongside investment opportunities related to the product and our significant participation enables us to add value for our clients and the marketplace for liquid and illiquid GBTC shares,” he said in an announcement.

GBTC enables traders to gain exposure to bitcoin without directly buying and holding the crypto themselves. Since its launch in 2013, it has grown to hold over 467,000 BTC for clients, meaning it manages over $6 billion in value. It's also an SEC-registered reporting company as of January, meaning that it files additional disclosures to the U.S. securities regulator throughout the year. 

Three Arrows Capital purchased a Bitcoin Trust stake similar to BlockFi's in June of this year, holding 6.26% of GBTC shares at the time for a $259 million purchase of 21 million shares. However, recent 8-K disclosures for events dated on October 15 show that Grayscale has since issued an additional 16,900,600 shares to "selected accredited investors." 

BTC holdings of the Trust have likewise trended upwards in recent months.

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.