May 21, 2024 - Economy

­čܬGrayscale's "Sonny" departs

Grayscale's Michael Sonnenshein

Michael Sonnenshein, former chief of Grayscale. Photo: Jeenah Moon/Getty Images

Michael Sonnenshein stepped down as chief of Grayscale Investments yesterday... to applause.

The big picture: He was at the helm when the firm aggressively lobbied for spot bitcoin ETFs, and when it won a historic court ruling against the SEC that paved the way for their collective January launch.

  • ­čŹŐ That's a shimmering orange feather in Sonnenshein's cap that both traditional finance and crypto can appreciate.

Catch up quick: He expressed "deep gratitude" toward those who were also on what he called "this incredible rocket ship journey" in social media posts, to which industry denizens responded with an outpouring of congratulations.

  • ­čĹĆ "Helluva journey" and "incredible run" was the prevailing sentiment.

Between the lines: Sonnenshein was front-of-house at Grayscale for most of his tenure, which he said is thanks to a fateful meeting with Barry Silbert, who at the time was running SecondMarket, a part of which is now called Digital Currency Group.

  • Story goes Silbert recruited him in 2013 to raise assets for the Bitcoin Investment Trust (when Grayscale's GBTC was called BIT) and by 2014, was leading the sales team behind it.

Zoom in: Here he is in 2015 discussing the launch of over-the-counter trading, and why people should invest in bitcoin.

  • Here he is explaining how DCG was modeled after SoftBank and Berkshire Hathaway in a 2018 interview with Anthony Pompliano.
  • That he succeeded Silbert to become chief of Grayscale in 2021, at 34 years old, speaks to how his efforts were received.

State of play: Sonnenshein steered GBTC, which prior to its ETF conversion was structured similar to a closed-end fund, through premiums/discounts to NAV (roughly, the market price of BTC held), lawsuits and regulatory battles related to that.

  • By way of ETF conversion in January, he closed the loop at GBTC.

The catch: Only what caused that gap to close ÔÇö publicly challenging the SEC and its chairman Gary Gensler, and gaining approval for bitcoin ETFs ÔÇö came with a cost.

  • The fund turned to sieve as it charged 1.5% while its new ETF competitors rolled out promotional fees of zero.

­čĺş Our thought bubble: With Sonnenshein's departure, there's one less tie between Grayscale and DCG, and there's a flashy outsider incoming ÔÇö smells like a spinoff. (That's what C-corps do!)

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