Following the bankruptcy of the “FTX” exchange and several other companies in the digital currency space, there have been discussions about the possibility of the bankruptcy of the Grayscale group for some time; But is the biggest institutional investor of Bitcoin and digital currencies really going to suffer the fate of FTX?
To Report Cointelegraph, Grayscale, which is considered the owner of the world’s largest investment fund on Bitcoin, published a statement on November 18 (Aban 27) and while providing details about the digital assets under its management, announced that it will use blockchain solutions for proof of reserves. (Proof of Reserves – as some exchanges have done) will not share the address information related to its funds with its customers due to security issues.
“In light of recent events, investors are understandably more serious than ever before inquiring about their cryptocurrency investments,” GrayXil’s statement begins. After the collapse of FTX under the questionable leadership of Sam Benkman Fried, this statement didn’t get the attention it should have, but the question likely on many investors’ minds is whether Bitcoin’s largest institutional investor will continue to suffer FTX’s fate. or not
The short answer to this question is that “it seems unlikely” and the main reason is that GrayXil’s senior executives are apparently far more qualified than Sam Benkman Fried.
Let’s get some facts. It cannot be denied that if Grayscale fails to appear successful in repairing its balance sheet, the digital currency industry will face a major downfall again. The cryptocurrency space doesn’t have the resilience to deal with another big crash right now; Especially if this fall is going to happen right after the bankruptcy of FTX and for one of the most key parts of this industry. Grayscale manages more than $10 billion of capital in the form of Bitcoin, Ethereum and other digital assets and is one of the largest sources of income for its parent company, Digital Currency Group.
Digital Currency Group is a large conglomerate that owns well-known institutions such as Genesis, mining company Foundry, Luno, and media veteran CoinDesk.
Barry Silbert, the CEO and founder of Digital Currency Group, published a note addressed to the shareholders of his group on November 23, and in it, referring to the discussions about the state of this company, he announced that despite The winter of digital currencies, Digital Currency Group is on the verge of registering an income of 800 million dollars for 2022, and its subsidiaries are also busy as usual.
He said in part of his note:
We have seen other winters in the digital currency space before, and although this winter may be tougher than the previous ones, we will come out of it stronger.
Silbert is one of the first people who tried to make Bitcoin popular among people and is considered a real supporter of digital currencies. Unlike the younger Sam Benkman Farid, he has 28 years of experience and before he discovered digital currencies, he was an investor banker in New York and also worked as CEO of the stock trading platform Second Market; A platform that was sold to Nasdaq by Silbert himself in 2015. In other words, this isn’t Silbert’s first challenging experience.
Over the past months, Silbert, together with the direct managers of the Grayscale group, has been fighting with the US Securities and Exchange Commission for rejecting the company’s request to convert the Grayscale Bitcoin Investment Fund (GBTC) into an exchange-traded fund (ETF). If their application is approved, GBTC would be dubbed the first Bitcoin exchange-traded fund in the US.
The United States Exchange Commission said that the reason for rejecting this request was Grayscale’s inability to answer the questions of the regulators about the concerns related to the issue of market manipulation and their weakness in protecting investors; But everyone knows very well that if the Stock Exchange Commission had accepted this request, the conditions would have been created for more institutional investors to enter the market, and probably the current recession would not have occurred.
Grayskill even filed a petition against this decision to the Columbia Court of Appeals and sued this American government agency for issuing an arbitrary and discriminatory sentence.
Anyone who cares about the future of digital currencies and is aware of the importance of legislation in this area in good faith to help the industry progress will see Grayscale’s fight with US lawmakers as a positive one.
In the November 18 statement of Grayskill, which was also mentioned at the beginning of this article, it is stated:
The fear caused by others is not considered a good and sufficient reason to abandon the security measures that have kept customers’ capital safe for years.
Grayscale has proven its worth and the credibility it now has is the result of a decade of steady growth, and that trend is unlikely to change anytime soon.