The SEC on Wednesday rejected Grayscale’s application for a spot bitcoin ETF, citing a failure by the investment manager to answer questions about concerns around market manipulation.

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Grayscale, the asset manager running the world’s largest bitcoin fund, said in a statement that it won’t share its proof of reserves with customers.

“Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure,” said a statement Friday.

Following the implosion of FTX and its subsequent bankruptcy proceedings exposing that customer funds were missing, multiple crypto exchanges have jumped to release proof-of-reserve audits in order to assuage investor concerns over the safety of their funds. Others, like Binance, say they soon plan to do so.

Grayscale wrote in a tweet that it realized that failing to disclose a proof of reserves would be a “disappointment to some,” but added that a “panic sparked by others is not a good enough reason to circumvent complex security arrangements” that have kept its investors’ assets “safe for years.”

Grayscale’s flagship fund is the Grayscale Bitcoin Trust, known by its GBTC ticker. Even as bitcoin trades at a multiyear low of around $16,000, GBTC is trading at a 45% discount to the price of its underlying asset.

While bitcoin is down 72% over the last 12 months, GBTC has recorded an 82% loss in that same period, as of last Friday. The spread reflects a significant disparity between the value of the trust’s sole holding and the open market price for a share in the trust.

In its statement Friday, Grayscale said that each of its digital asset products is set up as a “separate legal entity” and reiterated that those digital asset products are “stored under the custody of Coinbase Custody Trust Company.”

The firm pointed to a letter sent by Coinbase CFO Alesia Haas on Nov. 18, which breaks down an accounting of the tokens held at Coinbase Custody. Currently, Coinbase holds around 635,235 bitcoin on behalf of Grayscale, or $10.2 billion.

In a tweet, the firm added that the “laws, regulations, and documents that define Grayscale’s digital asset products prohibit the digital assets underlying the products from being lent, borrowed, or otherwise encumbered.”

Barry Silbert’s Digital Currency Group is the parent company of Grayscale, Genesis and CoinDesk. Last week, the lending arm of the crypto investment bank Genesis Global Trading paused new loan originations and redemptions.

The lending arm of the bank serves an institutional client base and is known as Genesis Global Capital. At the end of its third quarter, it had more than $2.8 billion in total active loans, according to the company’s website.

— CNBC’s Rohan Goswami contributed to this report.