Grayscale Bitcoin holdings confirmed by the on-chain sleuth

By putting on-chain forensics to use, an anonymous crypto investigator Ergo was able to verify that Grayscale owns approximately 633,000 BTC held by Coinbase Custody

Five Bitcoin coins on a keyboard.
Image: Jorge Franganillo/Creative Commons license

Grayscale, the asset manager running the world’s largest bitcoin fund GBTC, recently got into hot water for refusing to share proof of reserves with customers. In the days following the FTX collapse, there has been increased pressure on crypto companies to disclose their reserves, as greater transparency, many believe, would inhibit similar crises in the future.

CEO of Binance, Changpeng “CZ” Zhao, was the first to announce that his exchange would introduce “Merkle-tree poof of reserves” and called other exchanges to be as transparent as possible.

Since CZ’s tweet, most crypto exchanges showed support for the move, publishing their wallet balances or making commitments to do so in the nearest future. These include the likes of, Huobi, Poloniex,, KuCoin, OKX, Deribit, and Bybit. Grayscale, however, refused to disclose its holdings, citing “security concerns.”

“Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure,” Grayscale wrote in a statement.

“We know the preceding point in particular will be a disappointment to some, but panic sparked by others is not a good enough reason to circumvent complex security arrangements that have kept our investors’ assets safe for years,” the company added.

Following the statement, Grayscale’s flagship fund, Grayscale Bitcoin Trust (GBTC), traded with a record 45% discount to the price of BTC, its underlying asset. This spread, which reflects a significant disparity between the trust’s Bitcoin holdings value and the current market price of its shares, indicates that there is a strong bearish sentiment surrounding GBTC.

The rumors about GBTC's possible insolvency started to flow after the FTX contagion spread into the lending arm of the crypto investment bank Genesis Global Trading, which was forced to suspend redemptions and new loan originations on November 16. The parent company of Genesis is Barry Silbert’s Digital Currency Group, which also owns Grayscale, CoinDesk, Foundry, and Luno.

However, it seems for now that the aggressive selling of GBTC by investors had no basis other than panic. On Wednesday, crypto investigator Ergo of OXT Research managed to verify GBTC’s Bitcoin holdings using on-chain data, adding to the earlier confirmation by Coinbase.

Knowing that Grayscale has recently transferred most of its holdings from its previous custodian Xapo to Coinbase, Ergo was able to identify about 633k BTC across 432 addresses most likely linked to GBTC activity. The amount of Bitcoin in wallets is nearly equal to what GBTC claims to have, which, in turn, invites questions about why the company was so reluctant to disclose its holdings.

“We had originally thought that Coinbase Custody had some type of non-disclosure policy,” Ergo tweeted. However, this version was later dismissed due to Coinbase’s apparent willingness to disclose addresses.

“One of the only real reason we can guess as to why Grayscale does not want to disclose their addresses is to avoid providing information about who their most frequent counterparties are (ie DCG, Genesis, etc),” the investigator continued, pointing out to two wallet clusters with a sharply decreased volume of transactions that may belong to Genesis.

“Grayscale's refusal to disclose addresses or participate in a Proof Of Reserve serves to invite more scrutiny of their activity from the community and users,” Ergo concluded.