The GBTC Reserves Have Been Confirmed by Ergo Research

The platform for digital asset management was hesitant to reveal specifics on its Grayscale Bitcoin Trust (GBTC) reserve. However, an independent platform has taken it upon itself to investigate the on-chain activity of Grayscale in order to ascertain the state of the cryptocurrency's liquidity.

According to the findings of the OXT Research firm Ergo, which used the on-chain forensic information, GBTC had 633,000 BTC coins as of the 23rd of November. In addition, Coinbase Custody, which also serves as Grayscale's fund manager, has custody of the money while it is in Grayscale's possession.

Following the hack that occurred on the FTX exchange, crypto service providers have been subjected to an intense level of scrutiny about the verification of their assertions that they have a reserve money. As a direct consequence of this, crypto fans are asking exchanges for proof that they have cash.

The already fragile digital asset ecosystem would be thrown into greater disarray if there is a drop in the price of GBTC or a sudden lack of liquidity in the market for it. In addition, since the fact that Grayscale had ties to the troubled cryptocurrency lender Genesis Global Trading became public information, there is a rising sense of unease over Grayscale.

After a difficult month, investors will have renewed trust in the GBTC as a result of this news on Grayscale's holdings.

Ergo disclosed the reason for its investigation into the proof of reserve in a tweet on November 20. The tweet explained that the reason for the investigation is that Grayscale has hinted that security concerns are behind its refusal to release its reserve fund report.

Addressing the Problem with the Reserves

Xapo, which was serving as Grayscale's fund manager at the time, is said to have been responsible for the transfer of some of the company's assets to Coinbase Custody, which is now serving as the company's custodian. Ergo, on the other hand, was able to track down the on-chain activities by using the public on-chain data provided by the asset manager.

It was able to keep tabs on the funds and calculate their total value, which came to almost 317,705 BTC. Ergo also confirmed that the funds are being distributed among 432 different addresses.

The investigator also revealed that the addresses in question had Bitcoin holdings that were very similar to the amount that GBTC claimed it was holding. "it is pretty confusing why Grayscale was not ready to publish its on-chain BTC holdings," Ergo continued.

On the other hand, a user on Twitter revealed that he had uncovered a prospectus from 2017 that demonstrated the US Securities and Exchange Commission (SEC) had instructed Grayscale not to disclose its holdings to any entity, individual, or group. This information was found in the prospectus.