The audits have been taken off from Mazars Group’s website, which is recognized for providing proof of reserve audit services to cryptocurrency companies.
Related: Should We Expect Another Bitcoin Bull Run in 2023?
The proof-of-reserve audits for cryptocurrency exchange Binance were removed from Mazars’ website.
Proof of Reserve
When we use the term “Proof of Reserves,” we expressly mean the assets that we keep in trust for our customers. By doing this, we are demonstrating and proving that Binance has sufficient funds to cover all of our users’ assets in full, in addition to certain reserves.
The company’s official website states that Mazars Veritas, a subsidiary tasked with inspecting cryptocurrency exchanges, has been entirely ceased operations. The tool was created by Mazars utilizing the Silver Sixpence Merkle Tree Generating tool to supplement proof-of-reserve reports to “bring trust and transparency to the digital asset market.”
Additionally, Mazars ceased performing audits of proof-of-reserve for bitcoin companies, according to Bloomberg on December 16. Other auditing companies have quit working with cryptocurrency exchanges including OKX and Gate.io, including FTX’s auditor Armanino.
Mazars is the accounting firm that serves the company of former US President Donald Trump. The auditing firm was selected as the official auditor for Binance’s proof-of-reserve upgrades in late November.
Two other cryptocurrency exchanges, KuCoin and Crypto.com, have joined together with Mazars as part of their reserve reporting, imitating Binance’s move.
A spokesman for the exchange added that Mazars had announced that they will temporarily stop working with all of their cryptocurrency clients in other countries, including Crypto.com, KuCoin, and Binance. This suggests that, at least initially, we won’t be able to collaborate with Mazars, the official added.
The representative said that Binance has also contacted several sizable auditing companies, including the Big Four auditors, who are “at the moment hesitant to undertake a PoR for a private crypto company.” The company stated, “We will continue with our plans to provide Merkle Tree PoR to our users to show that client assets exist on on-chain addresses that are under Binance’s control.
Making a statement on why an auditing company decided to quit working with crypto? Ask them lol
— – (@sebxbt) December 16, 2022
Changpeng “CZ” Zhao, CEO of Binance, responded to the news on Twitter right away with a retweet from an arbitrary commenter.
The announcement follows Mazars’ confirmation on December 7 that Binance controlled 575,742 Bitcoin, valued at about $9.7 billion at the time of writing, belonging to its users. The report was then removed from Mazars’ website as well.
Numerous financial experts noticed some warning signs in Binance’s reserve report right away. The recently released Mazars study, according to an ex-member of the Financial Accounting Standards Board, is missing information on the effectiveness of internal controls and how Binance’s systems dispose of assets to pay off margin loans.
Mazars is not the only player to stop offering services to cryptocurrency clients.
According to a Forbes story, the audit company Armanino stopped performing crypto audits and lost its clients. The organization served as an auditor for the defunct FTX exchange as well as the cryptocurrency exchanges Gate.io and OKX.
Following the firm’s inclusion in a class action lawsuit for the audit carried out on FTX, Armanino made his decision. As more cryptocurrency businesses succumb to the FTX virus, auditors are shifting their opinions on the sector and curtailing their services.
Why is it important that accounting companies are leaving crypto audits?
Users’ faith in cryptocurrencies has decreased as a result of the bankruptcy and collapse of FTX exchange. Exchanges established a good habit of releasing the addresses of their hot and cold wallets and producing proof-of-reserves reports, which show that customer money is stored as is and is secure, to regain customers’ faith.
The veracity of the findings and the fate of customer assets at these sites may be questioned when additional auditors shut down their offices at bitcoin exchange firms.
More to read:
Follow Crypto Stoshi: Twitter, Telegram
Disclaimer: This blog is for educational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
