Filecoin Price Drops After SEC Asks Grayscale to Withdraw FIL Trust Application

The U.S. Securities and Exchange Commission (SEC) asked Grayscale to withdraw its application to launch a Filecoin (FIL) Trust product, the asset manager revealed Wednesday.

Grayscale said in a press release that it had received a comment letter from the federal securities regulator saying FIL “meets the definition of a security.”

“The SEC staff requested that Grayscale seek withdrawal of the registration statement promptly,” Grayscale said. “Grayscale does not believe that FIL is a security under the federal securities laws and intends to respond promptly to the SEC staff with an explanation of the legal basis for Grayscale’s position. Grayscale cannot predict whether the SEC staff will be persuaded that Grayscale’s position is correct, and if not, whether it may become necessary for Grayscale to seek accommodations that would enable the Trust to register under the Investment Company Act of 1940 or, alternatively, seek dissolution of the Trust.”

Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent company.

An SEC spokesperson declined to comment when asked if the agency could comment on FIL last month.

Grayscale said in a public filing in April that the SEC Divisions of Corporation Finance and Enforcement had reached out at the time “concerning [Grayscale’s] securities law analysis of FIL.

Grayscale “acknowledges that FIL may currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws, notwithstanding [Grayscale’s] prior conclusion,” the company said at the time.

FIL’s price dropped nearly 3% (15 cents) on the news of the filing, before rebounding slightly and trading at $4.51 at press time.

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