Grayscale has refused to share its proof of reserves.
When crypto was just taking off on its second major wave, you may have seen something known as the Grayscale Bitcoin Trust, with the ticker (GBTC). In case you didn’t or don’t recall, this Bitcoin Trust was the world’s largest Bitcoin fund. It allowed investors to gain crypto exposure, specifically Bitcoin, without buying it directly through a crypto exchange. GBTC was the first-ever publicly traded trust with a digital currency as its underlying value; This means that GBTC tracks the price of Bitcoin rather closely, albeit not completely. While bitcoin is down 72% over the last 12 months, GBTC has recorded an 82% loss in that same period. The spread reflects a significant disparity between the value of the trust’s sole holding and the open market price for a share in the trust.
The company that runs this all, Grayscale, has recently come under fire for failing to release security-verifying documents; this is a trend that most other crypto behemoths and exchanges like Binance have said they will do. Grayscale, specifically, said that it wouldn’t share its proof of reserves with customers. Grayscale’s reasoning is: “Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.” What do you think about Grayscale’s reasoning? And is it valid?
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I am not a financial advisor, and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.