On Nov. 18, Grayscale, the asset manager that manages the world’s largest Bitcoin (BTC) fund, released a statement detailing the security of its digital asset products and affirming that it will not disclose its proof of reserve to clients.
“Due to recent events, investors are understandably asking deeper questions about their crypto investments,” the statement begins, which is quite an understatement after FTX’s implosion and investigation of Sam Bankman-Fried’s questionable leadership. In a very short time, the question on everyone’s lips was clear. Will Grayscale be next?
The answer is that it is unlikely. And that’s largely because the people at the top who made Grayscale what it is seem more competent than Sam Bankman-Fried ever was.
Let’s look at the facts.
It’s true, and possibly undeniable, that the crypto industry will take another dive if Grayscale doesn’t correct its balance sheet. The room just can’t afford another crash, not so close to FTX and not that of such an important player. Grayscale manages more than $10 billion in BTC, Ether (ETH) and other assets and is its parent company’s top revenue contributor.
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Grayscale’s parent company — the same one that owns trading firm Genesis, mining company Foundry, crypto investment app Luno, and media outlet CoinDesk, among others — is Digital Currency Group, whose founder and CEO Barry Silbert announced to DCG shareholders on March 23. November delivered a notice addressing all the “noise” surrounding the company. He pointed out that despite the so-called crypto winter, the company is on track to hit $800 million in revenue and its individual entities are “operating as usual.”
“We’ve weathered previous crypto winters,” read the CEO’s note, “and while this one may feel heavier, together we will emerge stronger.”
Silbert is an early Bitcoin evangelist and a true cryptocurrency enthusiast. But unlike Sam Bankman-Fried, he has 28 years of experience under his belt. Before discovering crypto, he was an investment banker in New York and CEO of stock trading platform Second Market, which he sold to Nasdaq in 2015. So it’s not his first rodeo.
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Silbert, along with Grayscale’s own leadership, has also fought a parallel battle with the U.S. Securities and Exchange Commission after regulators denied their request to convert their flagship Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF). the first in the United States. The SEC did so because of the investment manager’s “failure to answer questions about concerns about market manipulation” and poor investment protection, but you might as well argue that cryptocurrencies could have had a chance had they accepted the offer “to attract more institutional investment.” to open up” and possibly avoid the current downturn that we are experiencing.
Grayscale then filed a petition to challenge the decision in the US Circuit Court of Appeals for the District of Columbia, suing the regulator for what she called an “arbitrary, capricious, and discriminatory” decision.
In other words, for anyone who cares about the future of crypto and believes in the importance of bona fide regulators to move the industry forward, Grayscale is fighting a good fight.
“The panic instigated by others is not sufficient reason to bypass complex safeguards that have kept our investors’ assets safe for years,” Grayscale said in its Nov. 18 statement. They have proven their worth and bolstered their reputation with a decade-long track record of consistent growth that is unlikely to change anytime soon.
Daniele Servadei is co-founder and CEO of Sellix, an e-commerce platform based in Italy.
This article is for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.