Bitcoin Giant Grayscale Announces It Will Not Provide Evidence Of Its Reserves, Explains Why

Cryptocurrency investment firm Grayscale has announced that it will not show proof of reserves after Bitcoin and Ethereum products fell to all-time lows.

Grayscale: “Our Assets are Verified by Coinbase”

Grayscale made the following statement on Twitter:

“Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof of Reserve or other advanced cryptographic accounting procedure.

Each of Grayscale’s digital asset products is established as a separate legal entity.

The laws, regulations, and documents that define Grayscale’s digital asset products prohibit lending, borrowing, or otherwise mortgaging the digital assets that form the basis of the products. Coinbase frequently performs on-chain verification.”

The firm acknowledged that its decision to keep its reserve information confidential will be a “disappointment” for some investors. After crypto giant FTX filed for bankruptcy protection earlier this month, crypto firms are under pressure to provide more information about their reserves.

2) Each of Grayscale’s digital asset products is set up as a separate legal entity: an investment trust for single asset products, and limited liability company for diversified products.

— Grayscale (@Grayscale) November 18, 2022

“But the panic caused by others is not a good enough reason to circumvent the complex security arrangements that have kept our investors’ assets safe for years,” Grayscale said.

Grayscale Bitcoin Trust (GBTC) hit a record low on Thursday, as did product ETHE. The firm’s parent company, Digital Currency Group, dismissed fears of the crisis spreading after FTX’s shocking collapse.

But at the same time, another organization affiliated with Grayscale recently stopped withdrawals. Genesis Global Capital is affiliated with the company through the Digital Currency Group.

*Not investment advice.