Independent research verifies GBTC’s 633K Bitcoin: So why won’t Grayscale?


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

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

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

The independent verification of its holdings will give some level of confidence to investors of the product and the industry as a whole, and follows Coinbase certifying the holdings earlier in the week.

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

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

Related: Bitcoin price still due for $12K dip, says trader as ETF guru backs GBTC

To find the rest of the BTC held by GBTC, Ergo had to “scan the blockchain” to find additional addresses that fit the profile of those they originally found, and notes that during the analysis “definitely includes false positives and negatives ,” the addresses they were found to contain properties of BTC almost identical to what GBTC claims to have.

Announcing that they have confirmed the properties, Ergo added:

“Which begs the question, why does Greyscale refuse to reveal their enchained holdings?”

Twitter user Skyquake-1 offered a possible answer, digging up GBTC’s Securities and Exchange Commission (SEC) filing from January 2017, which states that the custodian “cannot disclose such. [public] keys to the Sponsor, Trust or any other individual or entity.”

Ergo received praise from many in the community, including Delphi Digital’s crypto research firm Ceteris, which 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 fall of FTX, and has even received praise from Coinbase CEO and co-founder Brian Armstrong and Elon Musk for their efforts.