12 April, 2024

On-chain Analyst Report Says Grayscale Foundation Only Owns Half of the Claimed BTC

21 Nov, 2022

22 Nov, 2023

On-chain analyst ErgoBTC was able to identify 432 addresses owned by Grayscale with a balance of 317,705 BTC. This sum represents half of Grayscale’s reported current holdings of 633k BTC.

In total, we were able to attribute 432 addresses with a total balance of about 317,705 BTC to likely GBTC TXOs held by Coinbase Custody. Note this is about 78k BTC more than GBTC held during the transition from XAPO to Coinbase Custody.

ErgoBTC revealed in a Tweet thread. 

In the wake of FTX’s collapse, ripple effects have spread throughout the cryptocurrency industry.

With retail participants becoming increasingly sceptical of centralised custody solutions, many are being urged to provide “Proof of Reserve.” Following the lead of Binance, many exchanges have begun to team up with Nansen, a blockchain analytics platform, to be more transparent about their holdings.

Grayscale, a cryptocurrency investment firm, has refused to share its proof-of-reserves, citing “security concerns.” The move has fueled speculation about the company’s financial health.

Grayscale laid out information regarding the security and storage of its crypto holdings in a Nov. 18 Twitter thread addressing investor concerns and said all crypto underlying its investment products are stored with Coinbase’s custody service but stopped short of revealing wallet addresses.

ErgoBTC based its on-chain research on a Friday CoinDesk report that revealed Grayscale selected Coinbase Custody to serve as the new security provider for its digital asset holdings. Grayscale’s existing security provider, Xapo, transferred the assets to Coinbase.

Grayscale claimed to own approximately 240k BTC on July 29, 2019. When ErgoBTC examined the XAPO cluster for corresponding activity, it noticed a massive spike in volume from a handful of transactions.

XAPO’s large-volume transactions total approximately 233k BTC in volume. To get to the conclusions, ErgoBTC scoured the “nearby” graph for these corresponding transactions in an attempt to identify the addresses that are currently holding the associated Grayscale coins.

Grayscale is best known for its Grayscale Bitcoin Trust (GBTC), a security that tracks the price of Bitcoin; however, it also has products that track the price of other cryptocurrencies, such as Ether and Solana.

Investors are concerned because Genesis Global, GBTC’s liquidity provider, announced on Nov. 16 that it had halted withdrawals due to “unprecedented market turmoil.”



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