Grayscale, the world’s largest bitcoin fund, refuses to share “proof of reserves” as shares trade at a 45% discount to bitcoin | tech news

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Is grayscale a ticking time bomb? That’s the question investors in the world’s largest Bitcoin fund may need to ask after the company announced today that it will not share its proof of reserve with its clients, citing security concerns.

In a statement, Grayscale said:

“For security reasons, we do not make such on-chain wallet information and verification data publicly available via a cryptographic proof-of-reserve or other advanced cryptographic accounting method.”

In a tweet, Grayscale said it recognized that failure to disclose reserve evidence would be a “disappointment for some,” but added that “panic instigated by others is not sufficient reason to circumvent complex safeguards” that they maintain have investor assets “safe for years”.

The disclosure came after the second largest crypto exchange, FTX, filed for bankruptcy. Several crypto exchanges have released proof of reserve checks to calm investors’ concerns about the safety of their funds. Last week, CEO Kris Marszalek announced that he will provide “a fully audited proof of reserve” to attract clients following the accidental transfer of $400 million worth of Ethereum tokens to Asian crypto exchange calm.

Meanwhile, Grayscale added that it “has compiled additional information for investors on our website. We hope to remove any potential uncertainties and reaffirm the safety of the assets underlying Grayscale’s products.”

Grayscale’s flagship fund, known for its GBTC ticker, is the Grayscale Bitcoin Trust. GBTC trades at a 45% discount to the price of its underlying asset. While bitcoin is down 72% over the past 12 months, GBTC is down 82% over the same period ending last Friday.

In its Friday statement, Grayscale said each of its digital asset products is established as a “separate legal entity,” and reiterated that those digital asset products are “stored under the custody of the Coinbase Custody Trust Company.”

In a tweet, the company added that the “laws, regulations, and documents defining Grayscale’s digital asset products prohibit lending, borrowing, or otherwise encumbering the digital assets underlying the products.”


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