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Billion-Dollar Crypto Fund Grayscale Refuses to Post Proof-of-Reserves – Next Firm to Collapse?

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Crypto investment firm Grayscale has refused to share its proof-of-reserves citing "security concerns." The move has stirred up speculations about the financial health of the company.

In a Saturday tweet, the company said major cryptocurrency exchange Coinbase, which is used by Grayscale as custodian, frequently performs "on-chain validation," adding that they cannot share their proof of reserves due to security risks. "Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure," the company said.

In crypto, proof of reserves is a methodology that allows users to prove whether or not an independent auditor has the reserves of a specific exchange or business.

It uses Merkle Trees to capture data and get a set of fingerprints that let users verify that their funds were properly audited by a third party.Grayscale acknowledged that its decision to keep its reserve information private would be a “disappointment” to some investors.

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