Independent Research Verifies GBTC’s 633K Bitcoin: So Why Not Grayscale?


With Grayscale, a digital asset management firm, refusing to provide evidence of the reserves for its Grayscale Bitcoin Trust (GBTC), an independent analyst has been combing the blockchain for days to independently verify its holdings.

OXT Research analyst Ergo used on-chain forensics to confirm that as of Nov. 23, the GBTC holds approximately 633,000 Bitcoin (BTC) held by its custodian, Coinbase Custody.

Since the collapse of FTX, there has been increasing pressure on other exchanges and digital asset managers to prove they own the funds they claim. A collapse of GBTC, or liquidation of its holdings, would be a serious black swan event. Concerns have increased due to Grayscale’s relationship with controversial cryptocurrency lender Genesis Global Trading, as both are subsidiaries of venture capital firm Digital Currency Group.

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TSTIME verification of its positions will give investors of the product and the industry as a whole some confidence, following Coinbase’s testimonial about the positions earlier this week.

Ergo announced on November 20 that they were investigating GBTC’s holdings tweet after Grayscale cited security concerns as the reason for withholding on-chain evidence of reserves on Nov. 18.

Knowing that most of the assets had recently been transferred from Grayscale’s previous security provider Xapo to Coinbase Custody, Ergo was able to use public records and chain forensics to attribute a balance of approximately 317,705 BTC at 432 addresses to likely GBTC custody activity.

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To find the rest of GBTC’s BTC, Ergo had to “scan the blockchain” to find additional addresses that fit the profile of the addresses originally found, noting that while the analysis “certainly contains false positives and negatives,” the addresses they found contained BTC holdings almost identical to what GBTC claims to have.

Announcing that they had confirmed the holdings, Ergo added:

“Which begs the question, why is Grayscale refusing to disclose their on-chain holdings?”

Twitter user Skyquake-1 offered a possible answer, after digging up GBTC’s January 2017 Securities and Exchange Commission (SEC) filing, which states that the custodian has “such [public] keys of the Sponsor, Trust or any other person or entity.”

Ergo has received praise from many in the community, including crypto research firm Delphi Digital’s Ceteris, who retweeted the analysis and added:

“Ergo is a treasure”

The Twitter community has been a constant source of insight into the crypto industry, especially since the fallout from FTX, and has even received praise from Coinbase CEO and co-founder Brian Armstrong and Elon Musk for their efforts.

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