Grayscale Refuses To Show Proof of Reserves
Don't trust, verify is a popular slogan that becomes more popular recently. You cannot trust blindly, otherwise, you have to pay the price at some point. People trusted FTX and ended up losing their cryptos and funds. Now everyone wants to see the proof of reserves so that it can be checked and verified.
It is surprising that Grayscale refuses to show proof of reverses. They use the custody service provided by Coinbase to hold cryptocurrencies. Coinbase does its on-chain validation and makes sure that everything is okay and secured.
You just have to trust them. Grayscale is not going to provide on-chain wallet information and show their proof of reserves due to security concerns. You need to trust Grayscale the way you trust FTX and hope they have the reserves that they are supposed to hold.
FTX CEO Sam Bankman-Fried tweeted that they don’t invest customers' funds and FTX is safe. But what Sam Bankman-Fried or SBF said was nothing but a lie. They used their customers' cryptos and transferred them to Alameda Research to get involved in highly risky activities.
FTX US was safe and secure since it was a separate entity, according to SBF. But he had to file for bankruptcy and FTX US was there. Can you imagine a company that does not have an accountant? FTX was a legendary company that did not have an accountant. Unbelievable! How could it be possible?
Again, you have to trust them since SBF was a popular figure and genius, probably he did all accounting jobs and recorded everything in his memory. The interesting thing is, we will probably never know how much shady things were done and deleted just like all those tweets that were deleted on Twitter.
People get into crypto to cut the middleman and have freedom and control over crypto. You don’t need to trust anyone; code is the law. Centralized entities have been playing their game well in crypto so far until this bear market hits them hard and shows their real pictures.
Now we see many centralized entities are in trouble since they are connected directly or indirectly. The collapse of FTX shakes their financial stability. They find it hard to keep the balance and convince other people that they are safe and secure.
So what do you think about Grayscale’s attempt not to show its on-chain proof of reserve? Should people put their trust in Grayscale in spite of seeing what's going on in centralized entities in crypto? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.
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I don't think GBTC will show their reserves. It's under the premium and I think it just depends on how many people want to pull out of the investment. They are going to need the money somehow.
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Seeing what's going on in crypto, people ask questions about the centralized crypto entity. This bear market is going to be a hard one.