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Grayscale does not want to disclose assets "for security reasons"

 


Crypto investment firm Grayscale refuses to make its assets transparent through proof of reserves or disclosure of wallet addresses for “security reasons.”


According to a related Twitter thread on Nov. 18, Grayscale goes into great lengths about how investors' invested crypto assets are secured and held. For example, it is pointed out that user funds are held by Coinbase and are not stored directly with Grayscale itself. Nevertheless, the investment company does not want to make any more detailed information about the respective wallets public.



"We understand that this is a point of disappointment for some of you," Grayscale acknowledges, adding, "However, third-party scaremongering is not a sufficient reason for us to undermine complex safeguards that have been protecting our clients' funds for several years." to back up."


The investment firm is thus responding to the increasing pressure on crypto companies, which are being asked to make the holdings of their customer funds transparent after the FTX debacle.


As expected, some crypto users criticize Grayscale's view that wallet addresses are not disclosed for security reasons. For example, one commentator points out that even the wallet address of Bitcoin inventor Satoshi Nakamoto is known, but although it contains massive fortunes, these are still untouched.


To convince the community, Grayscale is attaching a letter from Coinbase Chief Financial Officer Alesia Haas and Coinbase Custody CEO Aaron Schnarch to the thread, which breaks down Grayscale's asset allocation and confirms it is "safe." Each investment product has its own wallet address, and meticulous care is taken to ensure that all crypto assets are "assigned to the respective Grayscale financial product".


To that end, Grayscale adds that each financial product is also legally separate from one another. In addition, "laws, regulatory requirements, etc. [...] would prohibit the invested assets from being loaned out or used in any other way".


Grayscale is known for the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin mutual fund ever. The investment company also offers various crypto investment funds for Ethereum (ETH) and other cryptocurrencies.


The company has recently come into the focus of investors unsettled by FTX, because the crypto broker Genesis Global temporarily switched off all payouts on November 16th.


Genesis, in turn, belongs to the Digital Currency Group (DCG), under whose umbrella Grayscale also operates. In case of doubt, a Genesis bankruptcy could also indirectly affect the largest Bitcoin investment fund, as investors fear.

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