Grayscale, one of the largest crypto investment firms in the world, announced that it will not be sharing proof of reserves as other crypto companies. Grayscale claims that this is due to security concerns that could affect their business. The information was officially released on Twitter a few hours ago by the company itself.
Grayscale Not to Share Proof of Reserves
In a recent blog post, Grayscale informed that the company is not going to release data or information about its proof of reserves. This comes after a large number of exchanges shared detailed information about the wallets where they hold users’ funds. The goal was to show that they are solvent and that they have enough funds to pay withdrawals at a 1:1 ratio.
Multiple exchanges, including Binance, have released information about proof of reserves. This is due to the fact that the FTX crypto platform imploded due to using its own digital asset as collateral. Therefore, trading platforms have been working in order to make users sure that their funds are protected and that they are not being used for other purposes.
6) Coinbase frequently performs on-chain validation. Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.
— Grayscale (@Grayscale) November 18, 2022
Grayscale decided not to share this information with investors. This is despite the pressure that has been created for this crypto trading firm. Grayscale released a press release in which they informed that they will not be sharing this private information publicly.
In the blog post they wrote:
“Custody of the digital assets underlying Grayscale’s digital asset products is unaffected, and our products’ digital assets remain safe and secure. We take transparency seriously, and have a long history of working constructively with regulators to create and strengthen full and fair risk disclosures for our digital asset products.”
Grayscale has also explained that their holdings are safe and secure, including balances, which are reflected in historical public filings. Additionally, they have also said that these balances have also been evaluated by third-party auditors.
In addition, Grayscale explained that all digital assets are currently held by Coinbase Custody Trust Company, LLC as a custodian for each of the products they offer. Despite not sharing the wallet information to create the proof of reserves, Grayscale has also attached a letter that verified the number of digital assets held by Coinbase Custody for each of Grayscale’s digital asset products.
Users can easily get access to these letters and check the information shared by Coinbase Custody about the products offered by Grayscale to investors. The industry has been working in order to offer more certainty to investors that want to get detailed information about what happens with their funds when they are deposited at third-party platforms. This could be a very good standard for the crypto industry if it wants to offer better services and solutions to users.
A few days ago, when Crypto.com shared its proof of reserves, users already detected suspicious transactions related to specific crypto assets. These things show that some exchanges might not be totally fair to users. Therefore, some individuals might prefer to avoid these platforms and move to those exchanges with proof of reserves that seem more reliable.