Hashdex to Liquidate $14.7M Bitcoin ETF; Sell by Aug. 17

Hashdex will liquidate the Hashdex Bitcoin ETF (ticker: DEFI), which held about $14.7 million as of July 30. Investors can sell shares through the close of NYSE Arca on Aug. 17. Liquidation of the fund’s Bitcoin holdings begins on Aug. 18.

Trading and creation and redemption basket orders will be suspended before the market opens on Aug. 18. After that date the portfolio will be shifted toward cash and will stop tracking its benchmark. The availability of any secondary-market trading after suspension is uncertain.

Filings by Hashdex show inconsistent timing for cash distributions. The fund’s liquidation plan and a later prospectus supplement indicate proceeds will be distributed on or about Aug. 24, while an SEC notice lists Aug. 28. A Form 8-K filed on Aug. 3 notes the dates are subject to change. Final per-share payments will depend on the price at which Bitcoin is sold and on transaction costs, liabilities paid or reserved for during the wind-down.

Hashdex’s prospectus ties the closure to cost pressures and a low asset base. The prospectus had warned that continuing to operate could be unreasonable if net assets fell below $20 million. On July 30 the fund reported roughly $14.7 million in assets; the filings say the gap between assets and operating expenses prompted the decision to close the fund. The prospectus does not disclose the fund’s current operating result.

The prospectus lists a 0.25% annual management fee. At the July 30 asset level, that fee equals about $36,750 a year before other fund expenses. Filings state the sponsor will cover remaining liquidation expenses. The exact cash amount per share will be known only after the fund completes sales and final accounting.

For U.S. federal income tax purposes, the filings treat the expected cash distribution as a liquidating distribution from a partnership. Tax outcomes will vary by investor; holders are advised to consult their own tax advisers.

Creation and redemption activity will end after Aug. 17 and trading will be suspended before the Aug. 18 open. The fund’s payout to each holder will reflect the proceeds from Bitcoin sales less transaction costs and any liabilities or reserves established during liquidation.