Onchain analysis verifies the number of BTC held by the Grayscale Bitcoin Trust

After Grayscale Investments shared information regarding the firm’s product holdings, people wondered why the firm wouldn’t share the public addresses associated with the crypto assets it holds. However, on Nov. 23, OXT researcher Ergo posted a Twitter thread with onchain forensic analysis confirming that Coinbase Custody holds a 633K bitcoin balance that likely belongs to Grayscale Bitcoin Trust (GBTC).

OXT Researcher Verifies Grayscale’s Bitcoin Holdings

Five days ago, Bitcoin.com News reported that Grayscale disclosed information related to the security and protection of the company’s digital assets. Grayscale’s statements were intended to assure the public that the company’s cryptocurrencies are “safe and secure” following the FTX crash.

The digital asset fund manager detailed that all of the company’s digital assets are on file with Coinbase Custody Trust Company. On Grayscale’s website, the firm states that Coinbase Custody is a qualified custodian under New York banking laws and funds are held in “cold storage.”

The only thing Grayscale hasn’t disclosed is the addresses of the company’s digital assets and has mentioned why it has chosen not to share wallets. Grayscale explained that it has never publicly disclosed onchain addresses to the general public “due to security concerns.” The claim has been criticized and mockedbut Grayscale said he understood the non-disclosure would be “a disappointment to some”.

Despite Grayscale’s nondisclosure, OXT researcher (oxt.me) so explained that it has initiated a community-led effort to create transparency around GBTC holdings. “We have taken steps to identify probable GBTC addresses and balances based on public information and blockchain forensics,” Ergo She said on November 20th.

Onchain Analysis verifies the number of BTC held by the Grayscale Bitcoin Trust
Ergo said the team of researchers “scanned the blockchain,” exploited heuristics, and linked publicly known bitcoin addresses.

Leveraging a Coindesk article, the heuristics and publicly known bitcoin addresses associated with custodian Xapo, Ergo that day “attributed 432 addresses holding 317,705 BTC to probable GBTC custodian activity.”

Researcher discovered at least 50% of GBTC holdings e added: “More work is needed to identify the remaining addresses.” At 2:49pm (ET) on Nov. 23, Ergo stated that the additional work was finished in a Twitter thread called: “The Grayscale G(BTC) Coins Part 2” Ergo tweeted:

In this analysis, we use add-ons [onchain] forensics to CONFIRM the approximate 633K BTC balance held by G(BTC) at Coinbase Custody.

Ergo’s summary notes that after discovering the first 50% of the bitcoins associated with Grayscale’s BTC, the team had to “scan the blockchain” for additional addresses that matched the profile of those found in Part 1.

Onchain Analysis verifies the number of BTC held by the Grayscale Bitcoin Trust

Ergo also leaves information on the independent analysts heuristics used and the bitcoin addresses compiled for research. “Obviously no heuristic or set of heuristics is perfect, and this analysis certainly includes false positives and negatives,” Ergo remarked. “But our result is nearly identical to the self-reported holdings of G(BTC).”

In the Twitter thread, Ergo says he doesn’t know why Grayscale has decided not to share the company’s BTC addresses. Ergo said the team initially thought Coinbase Custody might have a non-disclosure policy. But after reading some information published by Coinbase, Ergo She said “it seems clear that Coinbase Custody is willing to disclose the addresses.”

A number of people complimented Ergo’s Twitter thread and GBTC coin analysis. Additionally, the news follows Coinbase CEO Brian Armstrong, who explains that as of Sept. 30, Coinbase holds 2 million bitcoins.

Tags in this story

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What do you think of Ergo’s onchain analysis of GBTC’s bitcoin horde? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is News Lead at Bitcoin.com News and a financial technology journalist based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.




Image credits: Shutterstock, Pixabay, Wiki Commons, Ergo BTC, grayscale logo,

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