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.Read more on cryptonews.com