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After Grayscale Investments shared information about the company’s product holdings, people questioned why the firm would not share public addresses associated with the cryptocurrencies it holds. However, on November 23, OXT researcher Ergo published an on-chain forensics Twitter thread confirming that Coinbase Custody has a balance of 633K bitcoin likely belonging to the Grayscale Bitcoin Trust (GBTC).
Five days ago, Bitcoin.com News reported on Grayscale disclosing information related to the safety and security of the company’s digital assets. Grayscale’s statements were meant to reassure the public that the company’s cryptocurrencies are “safe and secure” following the FTX collapse.
The digital asset fund manager detailed that all of the company’s digital assets are stored with Coinbase Custody Trust Company. On the Grayscale website, the firm says that Coinbase Custody is a qualified custodian under New York banking laws and that the funds are held in “cold storage.”
The one thing Grayscale didn’t disclose is the company’s digital asset addresses, and it mentioned why it chose not to share the wallets. Grayscale explained that it has never disclosed onchain addresses to the general public “due to security concerns.” The claim was criticized and ridiculedbut Grayscale said it understood the non-disclosure would be “a disappointment to some.”
Despite Grayscale not disclosing, the OXT researcher (oxt.me) has Ergo explained that it was starting a community-led effort to create transparency around GBTC holdings. “We have taken steps to identify likely GBTC addresses and balances based on public information and blockchain investigation,” Ergo so on 20 Nov
Leveraging a Coindesk article, heuristics, and publicly known bitcoin addresses associated with custodian Xapo, on that day, Ergo attributed 432 addresses with 317,705 BTC to probable GBTC custodian activity.
The researcher discovered at least 50% of the GBTC stock and added: “further work is needed to identify the remaining addresses.” At 2:49 pm (ET) on November 23, Ergo said the additional work was complete in a Twitter thread called: “The Grayscale G(BTC) Coins Part 2” Ergo tweeted:
In this analysis, we use addn [onchain] forensics to CONFIRM the approximate 633K BTC balance held by G(BTC) at Coinbase Custody.
Ergo’s summary notes that after discovering the first 50% of bitcoins associated with Grayscale’s BTC, the team had to “scan the blockchain” for additional addresses that matched the profile of those found in Part 1.
Ergo further leaves independent analysts with information about heuristics used and bitcoin addresses compiled for the search. “Obviously, no heuristic or set of heuristics is perfect, and this analysis certainly includes false positives and negatives,” Ergo noted. “But our result is almost identical to G(BTC) self-reported holdings.”
In the Twitter thread, Ergo says it does not know why Grayscale decided not to share the company’s BTC addresses. Ergo said the team originally thought Coinbase Custody might have a non-disclosure agreement. But after reading some information published by Coinbase, Ergo so “it seems clear that Coinbase Custody is willing to disclose addresses.”
ONE Number of people complimented Ergo’s Twitter thread and analysis of the GBTC coins. Furthermore, the news follows Coinbase CEO Brian Armstrong who explains that as of September 30, Coinbase has 2 million bitcoins.
What do you think of Ergo’s onchain analysis of GBTC’s bitcoin horde? Let us know what you think about this topic in the comments section below.
Image credit: Shutterstock, Pixabay, Wiki Commons, Ergo BTC, Graytone logo,
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