On Nov. 18, 2022, at 5:47 p.m. (ET), Grayscale Investments’ official Twitter account shared information on the safety and security associated with Grayscale’s digital asset products. The update from Grayscale follows the recent FTX collapse that has shaken crypto investors, and Digital Currency Group’s (DCG) Genesis pausing the firm’s lending unit in terms of withdrawals and new loan originations.
Grayscale Updates Public With Safety and Security Information — Custodian Says ‘All Digital Assets That Underlie Grayscale’s Digital Asset Products Are Held by Coinbase Custody’
The FTX fallout has caused a ripple effect of fear in the crypto industry, which caused massive amounts of crypto withdrawals following the event. For instance, over $5 billion worth of bitcoin (BTC) and ethereum (ETH) was withdrawn from exchanges between Nov. 7 to Nov. 14, 2022. The FTX collapse has also fueled great interest in proof-of-reserves concepts, as Binance, Huobi, Crypto.com, and a slew of other crypto trading platforms have shared wallet addresses during the last two weeks. On Friday, Grayscale Investments tweeted an update “about the safety and security of the assets held by” the firm’s digital asset products.
Grayscale’s announcement follows the company Genesis pausing the firm’s lending unit as far as withdrawals and new loan originations are concerned. Grayscale, like Genesis, is a Digital Currency Group (DCG) subsidiary, and a lot of speculation has surrounded Genesis and its parent firm DCG since the withdrawal pause. The Wall Street Journal (WSJ) reported on Nov. 17, 2022, that the WSJ newsdesk viewed a “confidential fundraising document” that showed Genesis was reportedly soliciting investors for “an emergency loan of $1 billion.”
There’s been a lot of criticism directed at Grayscale and people talking about how the Grayscale Bitcoin Trust (OTCMKTS: GBTC) is upside down in recent times. For instance, GBTC’s premium or discount to NAV went from a premium to a discount in March 2022 and it has remained this way ever since. Just above Ark Investment Management, DCG is GBTC’s largest holder in terms of shares owned. Grayscale manages 643,572 bitcoin (BTC), which equates to 3.065% of bitcoin’s supply cap.
“Each of Grayscale’s digital asset products is set up as a separate legal entity: an…