On March 7, 2023, Donald Verrilli stood before three judges of the D.C. Circuit for Grayscale Investments1. The SEC had refused to let Grayscale turn its bitcoin trust into an exchange-traded fund. Verrilli's job was to show the refusal broke the agency's own logic. He won on Aug. 29, 2023.
Spot bitcoin ETFs began trading on Jan. 11, 20246. By Oct. 9, 2026, they had drawn $57.2 billion in net flows, by Farside Investors' count8. Grayscale's own fund, GBTC, lost $27.9 billion over the same span.
Who argued the case behind those funds, and who gained from it?
The lawyer
Verrilli was Solicitor General of the United States from June 2011 to June 20163. In that job he argued the cases that upheld the Affordable Care Act and recognized marriage equality. He is now a partner at Munger, Tolles & Olson.
One point carried the case. The SEC had approved funds that hold bitcoin futures. Grayscale's fund holds bitcoin itself, and the SEC denied it1.
Both sides, in their own words
Was the court right to make the SEC treat spot bitcoin funds the same as futures funds?
“The fundamental problem with the order is that it contradicts previous SEC orders giving a green light to Bitcoin futures ETPs that pose the same risk of fraud and manipulation, and have in place the same CME surveillance mechanism to protect against those risks, as the spot Bitcoin ETP that the SEC disapproved here. That is the definition of arbitrary decision making”
“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares”
The argument
An unofficial transcript of the hearing went up on Grayscale's site2. Grayscale says it checked the text for accuracy, and it links the court's official recording.
Verrilli opened with his whole case. “The fundamental problem with the order is that it contradicts previous SEC orders giving a green light to Bitcoin futures ETPs that pose the same risk of fraud and manipulation, and have in place the same CME surveillance mechanism to protect against those risks, as the spot Bitcoin ETP that the SEC disapproved here. That is the definition of arbitrary decision making,” Verrilli told the court, according to Grayscale's transcript2.
Judge Neomi Rao asked whether earlier SEC denials had reached a court. “I don’t believe they were. I believe this is the first one,” Verrilli answered, the transcript shows2. Rao pressed the same point. “So a lot of this really turns on the fact that the SEC has now decided to allow future Bitcoin— Bitcoin futures ETPs,” she said, by Grayscale's account.
SEC counsel Emily Parise defended the agency's reading of the studies. "The evidence is just mixed at this point," she said, in Grayscale's transcript2.
Verrilli also named the stakes for the futures funds. “They’re out there trading, there’s billions of dollars of assets wrapped up in them,” he said, the transcript records2.
His evidence was a number. In Grayscale's transcript, Verrilli pointed the judges to “the unrebutted record evidence showing 99.9% correlation in the movement of the two, which of course stands to reason”2. The two were bitcoin's spot price and CME futures prices1.
The ruling
Rao wrote for the three-judge panel, which included Chief Judge Sri Srinivasan and Senior Judge Harry Edwards1. “It is a fundamental principle of administrative law that agencies must treat like cases alike,” her opinion begins. The holding comes a few lines down. “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products.”
The proof came from futures prices. Grayscale showed “a 99.9 percent correlation between bitcoin’s spot market and CME futures contract prices,” Rao wrote1. The exchanges for both kinds of fund also had "identical surveillance sharing agreements with the CME".
That CME market dates to December 2017, when the CFTC let it self-certify. Read that story here.
The court vacated the SEC's denial1. Fortune's report on Aug. 29, 2023 quoted Rao, the correlation figure and Grayscale's statement4. Verrilli goes unnamed in it.
What the SEC did next
Gary Gensler, the SEC chair, explained the turn on Jan. 10, 2024. From 2018 through March 2023, he wrote, the SEC "disapproved more than 20 exchange rule filings for spot bitcoin ETPs"5. The court changed that.
“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” Gensler wrote5.
He limited the decision. The action, Gensler wrote, "is cabined to ETPs holding one non-security commodity, bitcoin"5. Gensler added that it “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities”.
Eleven funds traded on Jan. 11, 20246. Grayscale's fund was the largest, with more than $28 billion in assets carried over from its old trust. First-day volume topped $4.6 billion, by Bloomberg analyst James Seyffart's count, and GBTC drew about half of it7.
Where the money went
Farside Investors keeps a daily table of net flows for each US spot bitcoin fund, in millions of dollars8. On Jan. 11, 2024, net flows were $655.3 million, with $95.1 million leaving GBTC.
By Jan. 31, 2024, cumulative net flows stood at about $1,460 million8. The total peaked at $62,736 million on Oct. 9, 2025. Its highest month-end reading was $61,153 million, on Oct. 31, 2025. On Sept. 30, 2026, they stood at $57,564 million.
US spot bitcoin ETFs' net flows hit a month-end high of $61,153 million on Oct. 31, 2025
Running net flows since Jan. 11, 2024, at each month's end, in millions of US dollars
- January 2024, the first month: $1,460M
- Later months
- Height: Running net flows, $ millions
Sources: CNBC [6]; Farside Investors [8].
Read the chart as a table
| Item | Value | Note |
|---|---|---|
| Jan. 2024 | $1,460M | Spot bitcoin ETFs began trading on Jan. 11, 2024 |
| Feb. 2024 | $7,496M | |
| March 2024 | $12,132M | |
| April 2024 | $11,787M | |
| May 2024 | $13,860M | |
| June 2024 | $14,527M | |
| July 2024 | $17,695M | |
| Aug. 2024 | $17,603M | |
| Sept. 2024 | $18,866M | |
| Oct. 2024 | $24,214M | |
| Nov. 2024 | $30,679M | |
| Dec. 2024 | $35,246M | |
| Jan. 2025 | $40,502M | |
| Feb. 2025 | $36,941M | |
| March 2025 | $36,140M | |
| April 2025 | $39,109M | |
| May 2025 | $44,354M | |
| June 2025 | $48,954M | |
| July 2025 | $54,967M | |
| Aug. 2025 | $54,218M | |
| Sept. 2025 | $57,729M | |
| Oct. 2025 | $61,153M | |
| Nov. 2025 | $57,687M | |
| Dec. 2025 | $56,594M | |
| Jan. 2026 | $54,989M | |
| Feb. 2026 | $54,783M | |
| March 2026 | $56,098M | |
| April 2026 | $58,120M | |
| May 2026 | $55,714M | |
| June 2026 | $51,204M | |
| July 2026 | $51,377M | |
| Aug. 2026 | $54,916M | |
| Sept. 2026 | $57,564M |
Farside's totals through Oct. 9, 2026 split the winners from the plaintiff8. BlackRock's iShares Bitcoin Trust, IBIT, took in $65,733 million net7. Fidelity's fund, FBTC, took in $10,525 million. GBTC posted $27,944 million in net outflows.
Daily traffic tells the same story. On days money came in, IBIT added $89,202 million in all8. GBTC lost $29,346 million across the days money left it. GBTC's inflow days added up to $1,402.5 million.
IBIT took in $89,202 million and GBTC lost $29,346 million in gross flows by Oct. 9, 2026
Each fund's daily inflows and daily outflows, summed from Jan. 11, 2024, in millions of US dollars
- Days with inflows
- Days with outflows
- Height: Money moved, $ millions
Sources: CoinDesk [7]; Farside Investors [8].
Read the chart as a table
| Item | Days with inflows | Days with outflows |
|---|---|---|
| IBIT | $89,202M | $23,468M |
| FBTC | $31,030M | $20,505M |
| ARKB | $13,612M | $12,413M |
| BITB | $7,036M | $4,994M |
| GBTC | $1,403M | $29,346M |
A Bloomberg analyst gave one reason on launch day. Eric Balchunas said GBTC's volume likely came from existing holders selling, CoinDesk reported7.
The case for the ruling
Verrilli's case was consistency, and the court accepted it. The SEC had already trusted CME surveillance for futures funds1. Grayscale asked for the same treatment and got it.
Investors put money in. Net flows passed $57 billion by Oct. 9, 2026, by Farside's count8. The ruling forced the SEC to explain itself, and the explanation it gave was approval5.
The case against
Gensler approved the funds and kept his warning. “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin,” Gensler wrote5. He called bitcoin “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware”.
His statement disputes the consequence and leaves the law alone. A court can order consistency. Gensler argued the asset itself stayed risky5.
The record adds one more cost, borne by the plaintiff. Grayscale won the case, and $27,944 million left its fund8.
What to watch
Watch Farside's running total. The total stood at $57,178 million net on Oct. 9, 2026, below the $62,736 million high of Oct. 9, 20258. A reading above $62,736 million would set a new high. GBTC's outflows, at $27,944 million, show whether holders of the old trust keep leaving.
Sources
- Neomi Rao, "Grayscale Investments, LLC v. Securities and Exchange Commission, opinion of the court," U.S. Court of Appeals for the D.C. Circuit, Aug. 29, 2023, https://media.cadc.uscourts.gov/opinions/docs/2023/08/22-1142-2014527.pdf
- Grayscale Investments, "GBTC Litigation: Oral Arguments Unofficial Transcript," hearing of March 7, 2023, Internet Archive copy captured Dec. 4, 2024, https://web.archive.org/web/20241204092310/https://www.grayscale.com/blog/legal-topics/gbtc-litigation-oral-arguments-unofficial-transcript
- Munger, Tolles & Olson, "Donald B. Verrilli, Jr.," read Oct. 13, 2026, https://www.mto.com/lawyers/donald-b-verrilli-jr
- Jeff John Roberts, "Court sides with Grayscale in closely watched Bitcoin ETF case," Fortune, Aug. 29, 2023, https://fortune.com/crypto/2023/08/29/court-sides-with-grayscale-in-closely-watched-bitcoin-etf-case/
- Gary Gensler, "Statement on the Approval of Spot Bitcoin Exchange-Traded Products," Securities and Exchange Commission, Jan. 10, 2024, https://www.sec.gov/newsroom/speeches-statements/gensler-statement-spot-bitcoin-011023
- Jesse Pound, "Bitcoin ETFs begin trading on U.S. exchanges," CNBC, Jan. 11, 2024, https://www.cnbc.com/2024/01/11/bitcoin-etfs-begin-trading-on-us-exchanges-posting-gains-on-first-day-as-crypto-prices-rise.html
- Nick Baker and Krisztian Sandor, "Grayscale, BlackRock Top Bitcoin ETF Volume Ranking as Products Debut," CoinDesk, Jan. 11, 2024, https://www.coindesk.com/markets/2024/01/11/grayscale-blackrock-are-volume-leaders-as-bitcoin-etfs-debut
- Farside Investors, "Bitcoin ETF Flow – All Data (US$m)," daily flows from Jan. 11, 2024 to Oct. 9, 2026, Internet Archive copy captured Oct. 10, 2026, https://web.archive.org/web/20261010233232/https://farside.co.uk/bitcoin-etf-flow-all-data/