Independent Research Shows GBTC Has 633K Bitcoin Reserve – Why Didn’t Grayscale Provide Proof?
Following the collapse of FTX in the crypto industry, digital asset enthusiasts are increasingly demanding that exchanges reveal their proof of funds to provide information about their liquidity status. However, instead of Grayscale publishing its proof of reserve, an independent research platform has dug into its previous activities to clarify the GBTC’s reserve.
Ergo Research Confirms GBTC Reserves
The digital asset management platform was reluctant to provide details of its Grayscale Bitcoin Trust (GBTC) reserve. However, an independent platform has tasked itself with digging into Grayscale’s on-chain activities to determine its liquidity status.
The OXT Research firm, Ergo, used the on-chain forensic details to indicate that GBTC holds 633,000 BTC tokens as of November 23. In addition, the funds are under the guardianship of Coinbase Custody, which acts as Grayscale’s fund manager.
After the crash of the FTX exchange, crypto service providers have come under extreme scrutiny for proof of their claims of having a reserve fund. As a result, crypto enthusiasts are demanding evidence of funds from the exchanges.
On a broad scale, a downfall or sudden illiquidity of GBTC will trigger further chaos in the already troubled digital asset ecosystem. Moreover, there is a growing concern about Grayscale after its connection with embattled crypto lender Genesis Global Trading became public knowledge.
Following this revelation about Grayscale’s holdings, investors will have renewed confidence in the GBTC after a tough month.
Ergo revealed in a tweet on November 20 that the reason for its investigation into the proof of reserve is that Grayscale has hinted at security fears behind its refusal to release its reserve fund report.
Addressing the Reserve Issue
According to reports, Grayscale previously moved part of the funds from its then-fund manager, Xapo, to Coinbase Custody, as its new custodian. However, Ergo traced the on-chain activities through the asset manager’s public on-chain data.
It was able to track and calculate the balance of the funds, which amounts to almost 317,705 BTC. Ergo further confirmed that the funds are held across 432 addresses.
The investigator also disclosed that the addresses had BTC holdings which closely match the amount GBTC said it was holding. Ergo added, “it is pretty confusing why Grayscale was not ready to publish its on-chain BTC holdings.”
However, a Twitter user revealed that he had dug up a 2017 prospectus that showed that the US Securities and Exchange Commission (SEC) had instructed Grayscale not to disclose its holdings to any entity, individual, or group.
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