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Thursday, June 22, 2023

Is Fidelity Really Bidding for Grayscale? Really?

News summary by MFWire's editors

If there is one thing that Twitter's platform is good at, it is spreading rumors. Confirming the rumors, however, is not one of its strengths. This week Twitter user AP_Abacus — who goes by Andrew Parish in real life — posted that "sources" told him Fidelity [profile] is about to make a "seismic move" in digital assets involving both Bitcoin and Ethereum (see the tweet). He added that Fidelity is either about to file for a spot Bitcoin ETF or it may buy Grayscale [profile]. Or Fidelity may do both. In a second tweet, Parish wrote that he would not be surprised to see Fidelity begin staking soon.

Abigail "Abby" Pierrepont Johnson
FMR (dba Fidelity Investments)
Chair, President, CEO
Is this actually happening? Your guess is as good as ours. MFWire has heard nothing from more traditional sources, and all of the reports appear to trace back to Parish's tweet.

Fidelity filing to create a spot Bitcoin ETF — or what should really be called an exchange-traded commodity (ETC) — would certainly come as no surprise. Indeed, it would be a surprise if Fidelity did not eventually file to create one, especially if the SEC staff decides to greenlight one of the many applications stacked and sitting on their desks.

The bid to buy Grayscale would be a bigger surprise. Fidelity has rarely made acquisitions throughout its long history. And a Grayscale acquisition would not be small. The asset manager has roughly $50 billion in assets under management across 17 funds, including more than $16 billion in the Bitcoin Investment Trust.

While Fidelity could certainly afford the dollar price tag on a Grayscale deal, the reputational price tag would seem a bit steep. Fidelity CEO Abby Johnson is famously protective of the company's reputation and Grayscale would come with a bit of baggage.

That said, Grayscale's owner — Digital Currency Group (DCG) — is trying to raise funds after the collapse and eventual bankruptcy of Genesis Global Capital. In May DCG failed to make an owed $630 million payment to Genesis. It is also reportedly seeking to sell its CoinDesk business to raise cash. Still, we would be shocked if Fidelity is its buyer.

Circling back to Parish and his tweet. He does have a background in TradFi gossip and an established source network as the co-founder and former CEO of AdvisorHub. So, he could conceivably have heard something from someone.

He also has a record. Parish's tenure at AdvisorHub was cut short after he was sentenced to 18 months in a federal prison for failure to turn over taxes withheld from employee paychecks in 2009 to the IRS. That action happened at Axiom Consulting, a recruiting firm for broker-dealers that Parish founded and sold before his founding of AdvisorHub. Parrish started his career as a broker, a path that was cut short when Edward D. Jones & Co let him go after discovering he made 20 unauthorized trades on two clients' accounts. The NYSE also suspended him for three months for that infraction.

AdvisorHub under Parish was dubbed the "New York Post of Wall Street" and known more for gossip than hard news. In 2014, Parish told Reuters that he "field[ed] up to 400 emails and 100 text messages and phone calls daily from tipsters" trying to get information into his gossip page.

His current project is Arch Public, which makes automated trading bots for individual investors (think day traders). Parrish did not immediately respond to a request for comment.

This story was first published on our sister publication CeFiWire. 

Edited by: Sean Hanna, Editor in Chief

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