Grayscale Affirms All Crypto is Safe

Grayscale, part of the Digital Currency Group (DCG), published a blog post in recent days telling users that “all digital assets are safe and secure.”

Grayscale is the issuer of multiple digital asset-based funds like the Grayscale Bitcoin Trust (OTCQX:GBTC), which is traded on OTC Markets. Grayscale noted that all assets are held on Coinbase (and not FTX) and has posted links to documents that aim to calm any concerns that Grayscale may have an asset shortfall.

Grayscale stated:

“All digital assets that underlie Grayscale’s digital asset products are custodied with Coinbase Custody. As background, Coinbase Custody is a wholly-owned subsidiary of Coinbase Global, Inc. (NASDAQ: COIN), and is licensed to custody client digital assets as a New York-chartered limited purpose trust company. Coinbase Custody has been regulated by the New York State Department of Financial Services since 2018, the same regulator that oversees some of the United States’ biggest banks. Coinbase Custody also services as a fiduciary, which means that it is required to always act in its clients’ best interest under the New York Banking Law.

Coinbase Custody frequently performs on-chain validation as part of their custodian operations.  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.”

The need to post the statement is obviously due to fear of crypto contagion caused by the bankruptcy of FTX that has impacted many firms. In fact, it was reported that another DCG company Genesis – had to halt redemptions as well as experiencing an impact on its Earn program. Genesis reported that its derivatives business has approximately $175 million in locked funds in its FTX trading account. In total, it has been reported that FTX has over $3 billion in funds owed to outside firms and individuals.

There has been a good amount of chatter and rumors that other firms are struggling to keep things operational. Many crypto platforms have already disclosed if they have exposure and, if so, how much.

Meanwhile, the dust has yet to settle in the most recent chapter of spectacular crypto failures, and somehow, the industry has not taken it upon itself to create best practices and require heightened disclosure and counter-party risk to keep the crypto sector viable.

While the bankruptcy proceedings have just started, some are asking why FTX founder and former CEO Sam Bankman-Fried has yet to be arrested on criminal charges. Civil charges are certainly in the works.

https://twitter.com/WallStreetSilv/status/1593727639357116417?s=20&t=VLRiC5m6UpuiCKRvuSHcZQ

 



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