The world’s largest Bitcoin fund’s asset manager, Grayscale, stated on November 18, describing the security of its digital assets products and confirmed that it would not reveal its proof of reserves with customers.
In light of the demise of FTX and the investigation into Sam Bankman Fried’s leadership, will Grayscale be the next FTX?
It is improbable, largely because the ones responsible for making Grayscale look more capable than Sam Bankman-Fried ever was.
Let’s examine the evidence.
If Grayscale doesn’t restore its balance sheet, the crypto sector will take another drop, which is factual and possibly incontestable. The space cannot afford another crash, especially soon after the demise of FTX. Grayscale manages roughly $10 billion in BTC, Ether, and other assets and is the largest revenue producer for its parent business.
Grayscale’s parent company is Digital Currency Group, which owns, among others, trading firm Genesis, mining company Foundry, crypto investment app Luno, and media outlet CoinDesk. On November 23, Grayscale’s founder and CEO Barry Silbert sent a note to DCG shareholders addressing the “noise” surrounding the company. Despite the so-called crypto winter, he stated that the company was on track to surpass $800 million in sales and that its distinct entities were functioning as usual.
Silbert is one of the earliest Bitcoin evangelists and a great enthusiast for cryptocurrencies. In contrast to Sam Bankman-Fried, however, he has 28 years of experience. Before discovering cryptocurrencies, he was a New York investment banker and the CEO of the stock trading platform Second Market, which he sold to Nasdaq in 2015. In other words, this is not his first rodeo.
From the New York Times to the Washington Post, the media is gushing over Bankman-Fried.
Silbert and Grayscale’s leadership have been engaged in a parallel battle with the U.S. Securities and Exchange Commission after regulators rejected Grayscale’s application to convert its flagship Grayscale Bitcoin Trust (GBTC) into the first U.S. spot Bitcoin exchange-traded fund (ETF). The SEC did so on the grounds of failure by the investment manager to respond to questions about market manipulation and inadequate investment protection concerns. Still, you could also argue that they had accepted the bid. Cryptocurrencies would have been able to open up to more institutional investment and possibly avoid the current downturn.
Grayscale then filed an appeal with the U.S. Court of Appeals for the District of Columbia and sued the watchdog for an arbitrary, capricious, and discriminatory decision.
In other words, Grayscale is fighting a good fight for anyone who cares about the future of crypto and recognises the importance of regulators acting in good faith to advance the industry.
Panic sparked by others is not a sufficient reason to circumvent complex security arrangements that have keptr their investors’ assets safe for years. The firm has demonstrated its value and bolstered its reputation with a decade of consistent growth. This is unlikely to change soon.