Currently, Grayscale appears to be fighting the good fight for everybody in the cryptocurrency space. On November 18, Grayscale, the asset manager that operates the world’s biggest Bitcoin (BTC) fund, released a statement. The statement detailed the security of its digital assets products and affirmed that it would not share its proof of reserves with clients.
The statement begins:
“Due to recent events, investors are understandably inquiring deeper into their crypto investments.”
That is quite an understatement after the implosion of FTX and the inquiry into Sam Bankman-Fried’s questionable leadership. Within no time, the question that came to everybody’s lips became quite clear. Will Grayscale be next?
The answer is that it is unlikely to implode. That is major because the people at the top, the ones who made Grayscale what it is, seem to be more competent than Sam Bankman-Fried ever was.
Here are the facts:
It is true and probably undeniable that the crypto sector will take another drop if Grayscale does not fix its balance sheet. The industry just cannot afford another crash, not so soon after FTX and not that of such a major operator. Grayscale oversees over $10 billion in Bitcoin, Ether, and other Assets and it represents its parent firm’s largest revenue generator.
Grayscale’s parent company – the same that owns trading company Genesis, crypto investment app Luno, mining firm Foundry, and media outlet CoinDesk, among others – is Digital Currency Group, whose founder and CEO Barry Silbert shared a note to DCG shareholders on November 23. He was addressing all the ‘noise’ surrounding the firm.
He indicated that despite the so-called crypto winter, the firm was on track to reach $800 million in revenue and its separate entities were still “operating as usual.” The CEO’s note read:
“We have weathered previous crypto winters. And while this one may feel more severe, collectively we will come out of it stronger.”
Silbert is an early Bitcoin proponent and a real crypto enthusiast. But unlike Sam Bankman-Fried, he has 28 years of experience under his possession. Before he discovered crypto, he was an investment banker in New York and was the CEO of the stock trading platform Second Market, which he later sold to NASDAQ in 2015. Thus, this is not his first rodeo.
Silbert, together with Grayscale’s leadership, has also been putting up a parallel fight with the U.S. Securities and Exchange Commission after the regulators rejected its application to change its flagship Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund (ETF), the first on in the US.
The SEC did that on the grounds of failure by the investment manager to answer questions about fears surrounding market manipulation and poor investment protection, but people could as well make the argument that had they accepted that bid, cryptos would have had the chance to open up to more institutional investment and possibly avoid the current downturn that is happening currently.
Grayscale then filed a petition that challenged the decision with the US Court of Appeal for the District of Columbia and went on to sue the regulator for what it referred to as an “arbitrary, capricious, and discriminatory” ruling.
In other words, to anybody who cares about the future of crypto and believes in the importance of regulators working in good faith to propel the sector forward, Grayscale appears to be fighting a good fight.
Grayscale’s November 18 statement noted:
“Panic sparked by others is not a good enough reason to circumvent complex security arrangements that have kept our investors’ assets safe for years.”
They have already proven their worth and cemented their reputation with a decade-long track record of continuous growth. This is unlikely to change in the near term.
