Distrust is the word of the moment, following the fall of FTX. And it is the giant Grayscale which is apparently paying the price at the moment. While rumors swirl about the strength of its services, the company declined to share its wallet addresses. A decision that does not please the community.
Why is Grayscale’s GBTC struggling right now?
To understand what’s going on, we have to go back to the suspicions hanging over Grayscale at the moment. As a reminder, the Grayscale Bitcoin Trust (GBTC) is the largest cryptocurrency investment vehicle for institutional players. The company indeed keeps 634,000 BTC, i.e. 10.2 billion dollars at the current price.
The risk is therefore a particularly catastrophic contagion if Grayscale’s services were to collapse. However, the latter are currently accused of being more fragile than we thought.
Ryan Selkis, the founder of the analysis company Messari, thus affirmed a few days ago that the debts of Digital Currency Group, which issues GBTC, were greater than its cash. A tweet that has however since been deleted:
Oh boy,
as per @twobitidiotGenesis’ holding company Digital Currency Group, the issuer of $GBTCis experiencing a liquidity crunch.
“Appears holding company’s (DCG) liquid assets are below liabilities”. As a result, it looks like DCG is looking to raise outside funding. https://t.co/LvZ7inchYo
— Dylan LeClair 🟠 (@DylanLeClair_) November 17, 2022
Distrust therefore reigns, to the point that Grayscale issued a press release to allay investor fears.
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Grayscale will not publish its wallet addresses
The company detailed in a Twitter thread things to show the strength of its services. She recalls that the laws, regulations and documents surrounding the GBTC prevent it from being “loaned, borrowed or otherwise pledged“. In addition, the company recalls that the digital assets used for its investment products are kept by Coinbase Custody.
Grayscale therefore firmly asserts that all BTC that underpins its GBTC are held solely within this framework:
5) To be perfectly clear: the $BTC underlying Grayscale Bitcoin Trust are owned by $GBTC and $GBTC alone.
—Grayscale (@Grayscale) November 18, 2022
The company however refuses to publish the addresses of the wallets which contain the funds in question. Grayscale explains as follows:
“For safety reasons, we do not return the information”on chain” of this type public […] that that is by proof of cryptographic reserve or other advanced accounting cryptographic procedures. »
The community vscrypto not’has of course not been Nice to meet you of this refusalsome accusing Grayscale to have something to hide. However, the company has anticipated this review, and responded to it in the same Twitter thread:
“We know that this particular point will disappoint some, but the panic triggered by other entities is not sufficient reason to change complex security arrangementss that have kept our investors’ assets secure for years. »
So, legitimate security concern, or way to avoid scrutiny? In the community, the debate still rages. And it just goes to show that trust in major cryptocurrency-related companies has been turned upside down since the case. FTX.
👉 Also to be read – FTX : the new CEO reveals the chaos in business management
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Source : Grayscale via Twitter
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Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
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