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Although there are still no details on a possible rescue of Genesis Trading, there is at least apparently some positive news regarding Grayscale Bitcoin Trust (GBTC).

Ryan Selkis, co-founder of Messari declared Tuesday that it appears Genesis has ‘days, not weeks’ to reach an agreement with creditors to avoid Chapter 11. A yardstick for the crypto community, whether Grayscale really owns Bitcoin at a 1:1 ratio has now been investigated by analytics firm OXT Research.

For its part, Grayscale, which is the largest legal holder of Bitcoin with around 633,000 BTC, has refused to provide proof of reserve in recent days. Grayscale said in a statement via Twitter that he cannot make a crypto-reserve proof of Coinbase Custody public due to security concerns.

“We know that the previous point in particular will be a disappointment to some, but the panic caused by others is not reason enough to circumvent the complex security arrangements that have protected our investors’ assets for years,” said Grayscale.

Shortly after, Coinbase Custody also published a letter to Grayscale investors. The company reassured investors and confirmed that the funds were kept in cold storage. However, due to strict regulations, Coinbase Custody is prohibited by law from lending funds to its customers, the company said.

OXT Research Provides Proof of Grayscale Reserves

To kick off a community-led effort to ensure transparency of GBTC holdings, OXT Research has taken steps in recent days to identify probable GBTC addresses and balances based on public information and blockchain forensics.

On Sunday they released part one of their analysis, in which they used public data and on-chain forensics to identify 432 addresses with 317,705 BTC as probable GBTC custody activity. However, this was only around 50% of the current holdings reported by GBTC.

“Additional work is required to identify the remaining addresses. […] But it will take time to identify the remaining ~315,000 BTC,” OXT Research said.

In second part of its analysis, published a few hours ago, the research firm used additional on-chain forensic analysis to confirm the approximate balance of 633,000 BTC held at Coinbase Custody.

The starting point for the first part of the analysis was the transfer of 240,000 BTC from the then custodian GBTC. XAPO to Coinbase Custody after July 2019, but this approach has been exhausted. That’s why OXT Research expanded on Grayscale and Coinbase Custody’s interactions with known counterparties in the second part of its investigation.

Accordingly, the company concludes that Grayscale’s self-declaration is credible:

Obviously, no heuristic or set of heuristics is perfect, and this analysis certainly includes false positives and false negatives. But our result is almost identical to the self-reported holdings of G(BTC).

Part 2 estimate: 634,639 BTC
G(BTC) Reported: 633,394 BTC

However, there is also a (small) catch. Despite holding as much BTC as it claims to hold, Grayscale has chosen to forgo transparency. “Why?”

Originally, the research company assumed that “Coinbase Custody has some sort of non-disclosure agreement.” However, this contradicts an official letter.

OXT Research therefore concludes that one of the only real reasons why Grayscale might not want to disclose its addresses is that it wants to avoid providing information about the identity of its most used counterparties.

It could be DCG and Genesis Trading, according to OXT Research. The analysis shows that Grayscale has two groups of preferred wallets as counterparties. Both of these clusters have “OTC” wallet profiles with low transaction and address counts, high BTC volumes, and a preference for activity during EST working hours:

They are also intimately linked, with 1057 direct transactions and 336k BTC in direct flows between the two clusters. A massive relationship, indicating that it may be the same entity.





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