Grayscale Investments, the organization behind the Ethereum Classic Investment Trust (ETCG), a financial product that tracks the price of Ethereum Classic (ETC), has recently told a “few” investors that the funds in the product aren’t at risk.
Grayscale reportedly responded to client emails that expressed concern over their investments, in light of the recent 51% attack on ETC. According to CoinDesk the firm responded to its investors through an email, that wasn’t sent to all those who put money in the fund.
In the email, product development and research associate at Grayscale Matt Beck reportedly went into how 51% attacks work, and noted that the ETC Trust funds are “not at direct risk of theft or double-spending.” He was quoted as saying:
The greatest risk this poses is to the integrity of the Ethereum Classic Network, as people may be less inclined to accept ETC given the increased double-spend risk. However, the coins within the ETC Trust are not at direct risk of theft or double-spending.
Beck went on to quote Vertcoin developer Gert-Jaap Glasergen, who had in the past noted double spending attacks can only be done with the attacker’s own coins, not with someone else’s, which means the real risk is for those who accept ETC for goods or services, like exchanges.
As CryptoGlobe covered, cryptocurrency exchange Gate.io had to endure an over $200,000 loss because of the attack, as at the time it occurred the transactions seemed to be legitimate and were confirmed on the cryptocurrency’s blockchain.
Michael Sonnenshein, a managing director at Grayscale, told CoinDesk that the firm did receive inquiries from “a few investors” about the 51% attack on ETC’s network, and that in response it sent investors “publicly-available information explaining how these attacks occur.”
As of December 31, the Ethereum Classic Investment Trust had about $24.9 million under management. Grayscale manages these funds for a fee, allowing institutional investors to gain exposure to the cryptocurrency ecosystem without having to manage the cryptos themselves. ETCG’s price tracks that of ETC.
It’s worth noting that both CoinDesk and Grayscale Investments are owned by the Digital Currency Group (DCG), whose owners’ tweets on ETC have in the past reportedly raised concerns.