An independent analyst has confirmed that GBTC is around 633,000 Bitcoin which are held by its custodian – Coinbase Custody. This comes as Grayscale, the wealth manager that operates the world’s largest Bitcoin fund, announced it will not share its proof of reserve with clients.
According to the analyst, there could be two reasons that explain Grayscale’s reluctance. First, there could be a non-disclosure policy enforced by Coinbase Custody, or it could be an intentional obfuscation by Grayscale itself.
Confirmation of Grayscale’s proof of reserve
In total, they were able to match 432 addresses with a total balance of approximately 317,705 BTC to likely GBTC TXOs held by Coinbase Custody. This figure represents approximately 50% of GBTC’s reported current holdings.
The reliability of centralized crypto exchanges as custodians of customers’ assets has been questioned on a number of occasions. But only the spectacular collapse of FTX into bankruptcy revived the discussion about a potential called – Proof of Reserves.
The Proof of Reserves (PoR) is essentially an independent check performed by a third party to provide clarity and demonstrate that a custodian holds the assets it purports to hold on behalf of its clients. The balances are then aggregated by these auditors into a Merkle tree containing all customer balances.
Several firms are now rushing to release proof of reserves in what appears to be an attempt to reassure customers that their funds are safe.
The world’s largest cryptocurrency exchange by volume – Binance – already has information on theirs Wallet-Released credits and announced their plans to conduct a proof-of-reserve snap over the next few 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 Greyscale
The wealth manager, which managed the world’s largest Bitcoin fund last week, was forceful in saying it had no plans to follow in the footsteps of other custodians, citing security concerns.
In a statement last week, Grayscale said it understood that not disclosing proof of reserves would be “disappointing for some,” but added that “panic instigated by others is not sufficient reason to circumvent complex safeguards.” who have done so kept their investors’ fortunes “safe for years”.
“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.”
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Source: Crypto News Deutsch