Form 8-K Grayscale Ethereum Trust For: Dec 31

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

December 31, 2020

Date of report (Date of earliest event reported)

 

Grayscale Ethereum Trust (ETH)

(Exact name of registrant as specified in its charter)

 

 

250 Park Avenue South

New York, New York 10003

(Address of Principal Executive Offices) (Zip Code)

(212) 668-1427

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

---

Item 8.01. Other Events.

 

Appointment of Chief Executive Officer

On December 31, 2020, the sole member of Grayscale Investments, LLC, the sponsor (the “Sponsor”) of Grayscale Ethereum Trust (ETH) (the “Trust”), appointed Michael Sonnenshein as Chief Executive Officer of the Sponsor. Mr. Sonnenshein succeeds Barry E. Silbert, who will remain as Chairman of the board of directors of the Sponsor. A copy of the press release announcing the appointment is attached to this Report as Exhibit 99.1.

Michael Sonnenshein, Board Member and Chief Executive Officer

Michael Sonnenshein, 34, is CEO of the Sponsor, having served as Managing Director of the Sponsor since 2018. In this role, Mr. Sonnenshein oversees the strategic direction and growth of the business and its $19 billion in assets under management. Mr. Sonnenshein is also responsible for maintaining many of the firm’s key relationships with clients, industry stakeholders, and regulators as well as managing the development of the Sponsor’s single-asset and diversified digital currency products. From 2015 to 2017, Mr. Sonnenshein was Director of Sales & Business Development for the Sponsor, and prior to that served as an Account Executive from 2014 to 2015. Prior to joining the Sponsor, Mr. Sonnenshein was a financial advisor at JP Morgan Securities, covering HNW individuals and institutions, and an analyst at Barclays Wealth, providing coverage to middle-market hedge funds and institutions. Mr. Sonnenshein earned his Bachelor of Business Administration from the Goizueta Business School at Emory University and his Master of Business Administration from the Leonard N. Stern School of Business at New York University. Mr. Sonnenshein was honored in 2018 as one of Business Insider’s Rising Stars of Wall Street and serves as a member of the CME Group Bitcoin Futures Council and NYU Blockchain Association.

Acquisition of Index Provider

On January 5, 2021, CoinDesk, Inc., an affiliate of the Trust, and TradeBlock, Inc., the Index Provider for the Trust, announced that CoinDesk, Inc. acquired TradeBlock, Inc. on December 31, 2020. CoinDesk, Inc. and Grayscale Investments, LLC, the Sponsor of the Trust, are wholly owned subsidiaries of Digital Currency Group Inc. As a result of such acquisition, the Trust is updating its risk factor and its conflicts of interest disclosure contained in its Securities and Exchange Commission filings as follows:

Updates to the Trust’s risk factor disclosure:

 

Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust. The Sponsor and its affiliates have no fiduciary duties to the Trust and its shareholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its shareholders.

The Sponsor will manage the affairs of the Trust. Conflicts of interest may arise among the Sponsor and its affiliates, including the Index Provider and the Authorized Participants, on the one hand, and the Trust and its shareholders, on the other hand. As a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Trust and its shareholders. These potential conflicts include, among others, the following:

 

 

 

 

 

 

---

 

 

 

 

 

 

 

 

 

By purchasing the Shares, shareholders agree and consent to the provisions set forth in the Trust Agreement.

 

The Index Provider, which calculates the Index Price, is an affiliate of the Sponsor and the Trust.

On December 31, 2020, CoinDesk, Inc., an affiliate of the Sponsor and a wholly owned subsidiary of Digital Currency Group, Inc., acquired TradeBlock, Inc., the Index Provider. As a result of this acquisition, the Index Provider will become a wholly owned subsidiary of CoinDesk, Inc., which is a wholly owned subsidiary of Digital Currency Group, Inc. The Index Provider publishes the Index and the Index Price, which are used by the Sponsor to calculate the Digital Asset Holdings of the Trust. The Sponsor’s Fee accrues daily in U.S. dollars at an annual rate based on the Digital Asset Holdings Fee Basis Amount, which is based on the Digital Asset Holdings of the Trust, and is paid in ETH. The number of ETH that accrues each day as the Sponsor’s Fee is determined by reference to the Index Price published by the Index Provider.

The Index Provider selects the exchanges that are included in the Index and also developed the methodology and algorithm that provide the Index Price based on the exchanges included in the Index. The Index Provider formally re-evaluates the weighting algorithm used by the Index quarterly and may decide to change the way in which the Index is calculated based on this periodic review or in other extreme circumstances.

Under the rules governing the calculation of the Index Price, if the Sponsor determines in good faith that the Index does not reflect an accurate ETH price, then the Sponsor will employ an alternative method to determine the Index Price. Because such a determination could reflect negatively upon the Index Provider, lead to a decrease in the Index Provider’s revenue or otherwise adversely affect the

---

Index Provider, and because of their affiliation, the Index Provider may be incentivized to resolve any questions regarding, or changes to, the manner in which the Index is constructed and in which the Index Price is calculated in a way that favors the Sponsor.

In addition, although the Index does not currently include data from over-the-counter markets or derivatives platforms, the Index Provider may decide to include pricing from such markets or platforms in the future, which could include data from the affiliated Authorized Participant or Distributor and Marketer. Any impact on the accuracy or perceived accuracy of the Index Price could have a negative impact on the value of the Shares.

Updates to the Trust’s conflicts of interest disclosures:

The Index Provider

Digital Currency Group, Inc. is the indirect parent company of the Index Provider. As a result, the Index Provider is an affiliate of the Sponsor and the Trust and has an incentive to resolve questions regarding, or changes to, the manner in which the Index is constructed and in which the Index Price is calculated in a way that favors the Sponsor and the Trust.

In addition, Genesis, the only Authorized Participant as of the date hereof, licenses and uses a trading software platform provided by the Index Provider to operate its ETH trading desk and to facilitate Genesis’s actions as an Authorized Participant. Although the Index Provider does not currently utilize data from over-the-counter markets or derivative platforms, per the terms of the license, the Index Provider is entitled to use the over-the-counter trading data from Genesis in the Index.

 

Item 9.01. Financial Statements and Exhibits

 

(d)       Exhibits

 

 

 

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 7, 2021

 

 

 

 

Exhibit 99.1

 

Grayscale Investments® Names Michael Sonnenshein Chief Executive Officer

The firm expects to double its staff size and launch multiple new products in 2021

 

New York, Jan. 07, 2021 (GLOBE NEWSWIRE) -- Grayscale Investments®, the world’s largest digital currency asset manager, today announced that Michael Sonnenshein has been named Chief Executive Officer. Sonnenshein has been with Grayscale for seven years and served in his previous role of Managing Director for three years. He succeeds Grayscale’s founder, Barry Silbert, and will assume the role immediately. Silbert will continue as Chief Executive Officer of Grayscale’s parent company, Digital Currency Group.

 

“Grayscale has been at the vanguard of bringing digital currencies to the mainstream, and I could not be more proud of the results the team has achieved since the firm was founded,” said Silbert. “When Michael joined the firm seven years ago, we had one product and $60 million in assets under management. Today, investors from around the world can access 10 products, and the firm is managing more than $20 billion in assets. That accomplishment would not have been possible without Michael’s unrelenting passion for our business and his commitment to making the digital currency asset class available to a broader base of investors.”

 

“Under Michael’s leadership, Grayscale has assembled a world-class team hailing from top financial institutions, earned capital allocations from some of the biggest names in the investment community, cultivated partnerships with best-in-class providers, and inspired the next generation of leaders in the digital currency industry. I am excited for Grayscale’s continued expansion and evolution in the years ahead,” added Silbert.

 

As CEO, Sonnenshein will set the strategic direction of the firm, scale Grayscale’s business by investing in its people and operational capabilities, and expand the ability of investors to access the digital currency asset class. The firm expects to double its staff in 2021, as well as roll out multiple new products. These plans come on the heels of an extraordinary year for the firm, where its AUM grew from $2 billion at the start of 2020 to over $20 billion today — making it one of the fastest growing asset managers of all time.

 

“Working at Grayscale over the last seven years has been a once-in-a-lifetime opportunity. I am extremely grateful for the honor to assume the Chief Executive position at the firm, and I thank Barry for his vision, leadership, and support,” said Sonnenshein. “What sets Grayscale apart is the exceptional professionalism, integrity, and ambition of the people who I am fortunate enough to work with every day. I am humbled to be at the helm of this talented group of leaders as we continue to grow Grayscale into a powerhouse firm not just among the digital currency industry, but within the global asset management community as a whole.”

 

Sonnenshein joined Grayscale in 2014 as an Account Executive before being promoted to Director of Sales and Business Development. He served successfully in that role for three years before being named Managing Director in January 2018. Prior to Grayscale, he served in several roles at JPMorgan, Barclays, and Bank of America.

 

This press release is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal, nor shall there be any sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

 

About Grayscale Investments®

Grayscale Investments is the world’s largest digital currency asset manager, with more than $20B in assets under management as of December 31, 2020. Through its family of 10 investment products, Grayscale provides access and exposure to the digital currency asset class in the form of a security without the challenges of buying, storing, and safekeeping digital currencies directly. With a proven track record and unrivaled experience, Grayscale’s products operate within existing regulatory frameworks, creating secure and compliant exposure for investors. For more information, please visit www.grayscale.co or follow us on Twitter, @Grayscale.

 

[email protected]

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Grayscale Investments® Files S-3 Registration Statement for Grayscale Ethereum Trust
• Canadian Pink Floyd Tribute Band Floydium Performance At Summer Venues Announced
• Municipality Finance issues a GBP 50 million tap under its MTN programme