Crypto Giant Grayscale Says Providing On-Chain Proof of Reserves Threatens Its Clients’ Security

Crypto Giant Grayscale Says Providing On-Chain Proof of Reserves Threatens Its Clients’ Security


Crypto asset management giant Grayscale says it doesn’t want to provide precise on-chain proof of its reserves because of security risks.

Since the revelations that former crypto exchange FTX was mishandling its customer funds, other exchanges and firms have moved to provide proof-of-reserves to assure clients of solvency.

In a Twitter thread, Grayscale says that all of its digital assets that underlie its products are stored under the custody of Coinbase Custody Trust Company, but for security reasons, the firm won’t release cryptographic proof of its reserves.

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Says Grayscale,

“Coinbase frequently performs on-chain validation. 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.

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