Coinbase Custody Trust, the institutional investment arm of Coinbase Global, holds 635,000 BTC on behalf of Grayscale Bitcoin Trust, according to a note by Coinbase Custody CEO Aaron Schnarch. Digital investment firm Grayscale has also declined to share proof of reserves, citing security concerns.
See related article: FTX hit by hack rumor; Korea updates crypto death note
Coinbase Custody also holds over three million ETH for Grayscale Ethereum Trust, and 11.9 million ETC on behalf of Grayscale Ethereum Classic Trust, as of Sept. 30, according to the note that came as investors are increasingly concerned about the potential contagion of FTX’s collapse.
Grayscale shared the note from Coinbase Custody as “investors are understandably inquiring deeper into their crypto investments” due to recent events, according to Grayscale’s tweet, which highlighted the safety and security practices of the company’s digital asset products.
The digital investment giant wrote that “Coinbase frequently performs on-chain validation,” but will not release a cryptographic proof-of-reserve due to “security concerns.”
“We know the preceding point, in particular, will be a disappointment to some,” wrote Grayscale but added that investor panic was no reason to “circumvent complex security arrangements that have kept our investors’ assets safe for years.”
Grayscale’s digital asset products are set up as separate legal entities, which “prohibit the digital assets underlying the products from being lent, borrowed, or otherwise encumbered.”
See related article: Why FTX Shows We Underestimate Our Risk