Grayscale withholds on-chain reserve evidence for security reasons

blockchain.news:

Grayscale Investments, a company that sells cryptocurrency investment products, has declined to provide on-chain proof of reserves or wallet addresses in order to demonstrate the digital currency products' underlying assets, citing «security concerns.» Grayscale Investments is a cryptocurrency investment product provider. Grayscale laid out information regarding the security and storage of its cryptocurrency holdings in a Twitter thread on November 18 that was dedicated to addressing investor concerns. The company stated that all of the cryptocurrencies that underpin its investment products are stored with Coinbase's custody service, but it refrained from disclosing the wallet addresses.

Grayscale continued by saying, «We are aware that the previous point, in particular, will be a letdown to some,» but «fear created by others is not a good enough justification to violate intricate security mechanisms that have kept our clients' funds secure for years.»

In the aftermath of FTX's ongoing liquidity troubles and ultimately bankruptcy, Grayscale has decided to take this step in response to the mounting pressure being placed on the crypto industry to implement proof of reserves.

Some people on Twitter disagreed with Grayscale's view that security concerns were behind its decision to withhold its wallet addresses. One user commented that although the addresses of Satoshi Nakamoto, the inventor of Bitcoin, are widely known and are of greater value to attackers, «Satoshi's Bitcoin remains secure.»

Grayscale distributed a letter that was co-signed by Alesia Haas, the CFO of Coinbase, and Aaron Schnarch, the CEO of Coinbase Custody. The letter detailed Grayscale's holdings according to its investment products and reaffirmed that