Grayscale Bitcoin Trust (GBTC) In Snug Apart From Liquidity Problems At Genesis

The GBTC managing company is in news with its sister company, Genesis amid FTX collapse.
Grayscale says no to proof-of-reserves and shares trades at huge discounts to BTC.

What Does the Report Say?

Bernstein said in a research report, as the sister company Genesis Global Capital said it is halting its customer withdrawals in the wake of the FTX collapse, Grayscale Bitcoin Trust (GBTC) is in the news as the situation stays.

Genesis is facing liquidity issues for its lending book, and if it proceeds to file for bankruptcy, the creditors cannot claim the assets of GBTC. According to the report, it means that GBTC is indirectly affected by Genesis.

Grayscale Bitcoin Trust, which trades under the name GBTC, is an investment vehicle that acts the same way as a stock, in which each piece of share depicts a particular portion of Bitcoin (BTC). It was formed back in 2013 with the objective of transforming it into an exchange-traded fund (ETF) in over-the-counter markets.

Analysts manas Agrawal and Gautum Chhugani wrote:

“GBTC’s trust structure protects its holders and remains ring-fenced from failures within DCG or DCG group entities.”

According to CNBC, Grayscale, which is the asset management company laying the world’s largest BTC fund. The company officials said in a statement that they would not publicize their Proof-of-Reserves-

“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, Genesis Amid FTX Collapse

After the crypto exchange FTX filed for bankruptcy under Chapter 11, which was also accused of mishandling customers’ funds by the United States Securities and Exchange Commission (SEC). After that, many exchanges, for example, Huobi, Bitget, Bybit and Gate.io, have jumped to disclose Proof-of-Reserves to win the investors’ trust that their funds are safe.

The CEO of the world’s largest crypto exchange was the first to suggest the revelation of Proof-of-Reserves. Also, he had already shared the wallet address publically and noted that the Proof-of-reserves would be presented soon.

According to the Coin Republic, Grayscale confirms that the cryptocurrencies are gone through periodic validations performed under the custody of Coinbase, which is the sole American-regulated and publicly traded crypto exchange.

On November 19, Grayscale remarked that following in a long Twitter thread-

“6) 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.”

Digital Currency Group (DCG) is the parent company of Grayscale Investments, Genesis and Coindesk. According to Bernstein, DCG’s owned Grayscale is their “flagship business and cash cow” which profits them $300 million annually in fees.

The note discussed that GBTC had presented a massive 45% discount in trades to the price in par to BTC, which means that the investors can only exit after a six-month freeing after the end of the lock-in period.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing