Analyst Confirms GBTC’s 633K Bitcoin Claim Despite Grayscale’s Reluctance to Share Proof of Reserves

Analyst Confirms GBTC’s 633K Bitcoin Claim Despite Grayscale’s Reluctance to Share Proof of Reserves

An independent analyst has confirmed that GBTC owns approximately 633,000 Bitcoin held by the custodian – Coinbase Custody. This comes as Grayscale, the asset manager that runs the world’s largest bitcoin fund, revealed it will not share its proof of reserves with clients.

According to the analyst, there could be two reasons that explain Grayscale’s reluctance. One, it could be a non-disclosure agreement enforced by Coinbase Custody, or it could be a deliberate cover-up by Grayscale itself.

Confirms Grayscale’s Proof of Reserves

An OXT Research analyst, who is pseudonymously known as Ergo, has confirmed the existence of Grayscale’s chain inventory using chain investigation.

In total, they were able to attribute 432 addresses with a total balance of around 317,705 BTC to likely GBTC TXOs held by Coinbase Custody. The figure is roughly 50% of GBTC’s reported current holdings.

The reliability of centralized crypto exchanges to serve as custodians of clients’ assets has been questioned several times. But it wasn’t until the spectacular collapse of FTX into bankruptcy that revived the discussion around a potential called – Proof of Reserves.

Proof of reserves (PoR) is essentially an independent audit carried out by third parties in an attempt to provide clarity and evidence that a custodian holds the assets it claims to hold on behalf of its clients. The balances are then aggregated by these auditors into a Merkle tree, which contains all the client balances.

Several firms are now rushing to publish proof of reserves in an apparent attempt to reassure customers that their money is safe.

The world’s largest cryptocurrency exchange by volume – Binance – has already published information about its wallet balances and revealed its plans to conduct a proof-of-reserves snapshot in the coming weeks. Gate.io, KuCoin, Poloniex, Bitget, Kraken, Huobi, OKX, Deribit and Bybit are some of the other prominent exchanges that have made similar commitments.

But not shades of gray

The asset manager that runs the world’s largest bitcoin fund said last week firmly that it has no plans to follow in the footsteps of other custodians, citing security concerns.

In a statement last week, Grayscale wrote that it understands not disclosing evidence of reserves would be a “disappointment for some”, but went on to add that a “panic triggered by others is not a good enough reason to bypass complex security arrangements” that have kept investors’ assets “safe for years.”

“Due to security concerns, we do not make such wallet information and confirmation data publicly available through a cryptographic reservation certificate or other advanced cryptographic accounting procedure.”

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