World’s largest bitcoin trust refuses to share proof of reserve audit
By Arsenio Toledo // Nov 30, 2022

Grayscale, the world's largest bitcoin trust, is refusing to provide proof of reserve audit amid concerns from investors that the company may be affected by the FTX fiasco.

Following the implosion of FTX earlier this month and its subsequent bankruptcy proceeding exposing the depths of the company's mishandling of customer finances, multiple cryptocurrency companies have jumped to release proof-of-reserve audits.

A proof of reserve audit is a way for both clients and potential investors to prove that an independent auditor studied and proved the state of an exchange or business' reserves. In the wake of FTX's collapse, this served as the main method crypto companies used to win back investor confidence amid concerns that their businesses might be sorely affected by the FTX scandal. (Related: Crypto Nostradamus John Perez: Cryptocurrency scam is THE SCAM of the century.)

Notable crypto companies have already provided their own proof of reserve audits, while others like Binance have agreed to publish their own audits soon. However, Grayscale has bucked the trend and remains adamant about keeping the state of its reserves secret.

"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," said Grayscale in a statement.

The company said it is aware that failing to provide proof of reserves is a "disappointment to some," but pointed out that "panic sparked by others is not a good enough reason to circumvent complex security arrangements" that have kept its investors' assets "safe for years."

In a subsequent message, Grayscale assured its clients and investors that its cryptocurrency is held by the custody service provided by crypto exchange platform Coinbase, which is the only regulated and publicly traded cryptocurrency exchange in the United States. Grayscale noted that Coinbase regularly performs on-chain validation, and as such its own audits are unnecessary.

Grayscale could be next big crypto company to collapse

Grayscale currently holds the largest cryptocurrency trust in the industry. A recent report published by Coinbase showed that it holds a little under 635,236 bitcoin on behalf of GBTC. This amounts to around $10.72 billion worth of bitcoin as of press time.

In the wake of the FTX meltdown, notable industry heavyweights like Terra, 3AC and Celsius have lost a lot of their market cap and are themselves on the brink of collapse. Grayscale's refusal to provide proof of reserve audit has not assuaged concerns from investors, but has instead fueled speculation that the company's finances are direr than it is letting on, despite Coinbase's recent report on its holdings.

These rumors are not helped by the loss in value of bitcoin. Over the last 12 months, bitcoin has traded 72 percent lower and is currently trading at a multi-year low of below $17,000. Grayscale's flagship fund, the Grayscale Bitcoin Trust, known by its stock market ticker as GBTC, has also recorded an 82 percent loss in value in the last 12 months and is currently trading at a 45 percent discount to the price of its underlying asset.

Grayscale is also using Coinbase to hold over a dozen other cryptocurrency assets, including the Grayscale Ethereum Classic Trust with over $238 million worth of Ethereum Classic; the Grayscale Ethereum Trust with nearly $3.89 billion worth of Ethereum; and the Grayscale Litecoin Trust with over $119.5 million worth of Litecoins.

Instead of its own proof of reserve audit, Grayscale redirected clients, investors and analysts to Securities and Exchange Commission filings on its website for off-chain validation, which is required by law. It also confirmed that each of its over a dozen trusts are registered as separate legal entities to prove that each product is segregated from Grayscale's main fund.

Watch this clip from Fox News featuring a former FTX investor saying the company's scandal is a "big lesson" for the crypto community.

This video is from the News Clips channel on

More related stories:

FTX contagion spreads as BlockFi crypto firm files for Chapter 11 bankruptcy.

FTX collapse fallout: Crypto brokerage firm Genesis warns of possible bankruptcy.

Crypto exchange platform Coinbase lost around 85% of its value in one year.

Globalist operative: Sam Bankman-Fried and his FTX cryptocurrency exchange SCAM heavily promoted by World Economic Forum as example of "effective altruism" and "stakeholder capitalism." withdrawals SURGE after CEO admits "mishandling" $400M transaction.

Sources include:

Take Action:
Support NewsTarget by linking to this article from your website.
Permalink to this article:
Embed article link:
Reprinting this article:
Non-commercial use is permitted with credit to (including a clickable link).
Please contact us for more information.
Free Email Alerts
Get independent news alerts on natural cures, food lab tests, cannabis medicine, science, robotics, drones, privacy and more. © 2022 All Rights Reserved. All content posted on this site is commentary or opinion and is protected under Free Speech. is not responsible for content written by contributing authors. The information on this site is provided for educational and entertainment purposes only. It is not intended as a substitute for professional advice of any kind. assumes no responsibility for the use or misuse of this material. Your use of this website indicates your agreement to these terms and those published on this site. All trademarks, registered trademarks and servicemarks mentioned on this site are the property of their respective owners.

This site uses cookies
News Target uses cookies to improve your experience on our site. By using this site, you agree to our privacy policy.
Learn More
Get 100% real, uncensored news delivered straight to your inbox
You can unsubscribe at any time. Your email privacy is completely protected.