Audits firms Armanino, Mazars ditch crypto clients in wake of pushback News โธ Binance โธ FTX โธ Bear Market
Audits firms Armanino, Mazars ditch crypto clients in wake of pushback
Armanino and Mazars are set to cease working with crypto clients amid a string of controversies.
2 min read
Updated: Dec. 16, 2022 at 1:02 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Audit firms Armanino and Mazars are set to drop their crypto clients following controversies and community pushback.
Armanino, Mazars jump ship
Auditors Armanino and Mazars count several high-profile crypto companies among their collective clients, including Nexo, Gate, FTX, Kraken, Binance, and Crypto.com.
However, the efficacy of crypto audits has been called into question recently, primarily due to the collapse of FTX.
FTX filed for Chapter 11 bankruptcy on Nov. 11 amid a flurry of controversy, including allegations of fraud and misuse of customers’ funds. In a bankruptcy filing last month, newly appointed CEO John Ray commented that he had substantial concerns with the company’s financial records:
โ[There was] such a complete failure of corporate controls and such a complete absence of trustworthy financial information.“
Prager Metis CPAs sign off on FTX Trading LLC’s financial statements for 2020 and 2021. At the same time, Armanino signed off on FTX U.S.’s financial statements for the same period.
In a lawsuit filed last month, Prager Metis CPAs and Amanino were accused of being “willfully blind” to the “racketeering” at the disgraced exchange.
Although Armanino has not commented on the situation, sources claim the firm has decided to cease working with crypto clients, according to Forbes.
Similarly, per Bloomberg, Binance’s auditors, Mazars, have also decided to put a hold on working with crypto clients.
Following the FTX collapse, crypto platforms rushed to provide Proof of Reserves (PoR) to calm investors’ fears of insolvency. In Binance/Mazars’ case, critics said PoR is flawed and does not give the same scrutiny as a full audit.
Binance suffered a run this week, which saw cumulative outflows peak at approximately $7.5 billion. Binance CEO Chanpeng Zhao said it was a “good idea to “stress test withdrawals.”
Crypto accounting standards unclear
Arca CIO Jeff Dorman pointed out that “auditors are still learning” when it comes to crypto audits, and, in any case, it is difficult to prove access for every token listed as an asset.
“Per audit issues above, in a “guilty til proven innocent” environment, it’s virtually impossible for Binance (or any exchange) to actually prove innocence in a timely fashion.
No matter what they do, it won’t be enough in naysayers’ eyes.“
What’s more, Dorman’s point touches on the lack of clear guidance from accounting standards on treating digital assets.
While that alone is no excuse for being “wilfully blind,” it still highlights the deficiencies of applying legacy safeguards in their current form on digital assets.
Meanwhile, per BTC_Archive, Mazars has removed access to its PoR assessments.
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Samuel Wan
Samuel Wan, a finance professional turned full-time crypto content creator, values individual autonomy and personal freedom in his pursuits.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Nexo
Nexo is a leading global financial institution specializing in digital asset services, particularly focusing on cryptocurrency lending, exchange, and financial management solutions.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Crypto.com
Crypto.com was founded in 2016 on a simple belief: itโs a basic human right for everyone to control their money, data and identity.
Kraken
Kraken is a San Francisco-based digital asset exchange in euro volume and liquidity that trades various currencies, including Canadian dollars, US dollars, British pounds, and Japanese yen.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.