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Accounting Firm Mazars Has Paused Work for Crypto Clients, According to Binance.

Accounting Firm Mazars Has Paused Work for Crypto Clients, According to Binance

According to a cryptocurrency exchange, platform outflows increased to $6 billion.

In an effort to reassure users that their money is secure, Binance, a major cryptocurrency trading platform, said the accounting company it uses to check its reserves has suspended all activity for crypto clients.

In addition, Binance reported $6 billion worth of withdrawals from its platform, reflecting the unrest among cryptocurrency traders who were alarmed by the collapse of competitor exchange FTX last month.

A report on reserves at Binance and other cryptocurrency-trading companies was removed from the website of Mazars, a mid-sized accounting firm that formerly worked for the business of former President Donald Trump, on Friday. Binance’s report, which wasn’t an audit, was released last week.

According to a spokeswoman for the accounting company, the decision was made “due to concerns surrounding the public’s understanding of these reports.”

Mazars’ choice, according to a spokeswoman for Binance, didn’t put customer cash in danger. According to him, “Our customers want to know that their money is safe and that our company is a financially stable one.” “We support further transparency, and in the next months, we are evaluating the best way to deliver those details,” the statement continued.

This past week, Binance saw a dramatic rise in customer withdrawals, with a net outflow of about $6 billion occurring between Monday and Wednesday. The business did not state what proportion of total consumer deposits this represented. It stated that outflows were roughly $1.1 billion earlier in the week. The company was able to execute the withdrawals “without breaking stride,” according to the Binance spokesman.

This year has been a turbulent one for the world of digital currencies due to a slew of failures involving crypto currencies, exchanges, and hedge funds. Binance is regarded as a gauge for the industry as a whole’s capacity to weather the storm as the largest surviving player.

Since the demise of Binance rival FTX, which was charged by federal authorities with stealing customer assets, the role accounting companies play in the cryptocurrency business has received new scrutiny. Many platforms have used accounting companies to verify how they handle user deposits.

One of them was Tether Holdings Ltd., the company that creates tether, the biggest stablecoin in the world. The accounting company BDO, which recently approved reserves reports for Tether, announced on Friday that it is rethinking its work for cryptocurrency businesses.

We are currently reviewing our approach to this area and the work we provide for our clients, similar to several other professional service firms, according to a spokeswoman for the BDO international network. The spokesperson refrained from commenting on any specific business.

BDO Italia, the BDO member firm in Italy, handled the Tether attestation. According to a Tether spokeswoman, “We remain confident in our relationship with BDO Italia and do not anticipate any change in plans.” As the leading stablecoin and a forerunner in financial freedom.

Customers of cryptocurrency exchanges make deposits in exchange for private digital currencies that are not backed by the government. Additionally, they can deposit digital currencies right into the exchanges. On an exchange, customers are matched and transactions across different cryptocurrencies are arranged. Users can trade or borrow against their digital coins on the exchange

Some of the major cryptocurrency exchanges make the commitment to back each individual customer holding in segregated accounts, much as traditional brokerage accounts function. However, there is little oversight, control, or auditing of cryptocurrencies to ensure that users’ money is indeed where they think it is.

Mazars has performed so-called proof-of-reserves reports for competing exchanges and KuCoin in addition to his work for Binance. In order to achieve our goals, we’ll be working with credible audit companies until 2023 and beyond.

firms in 2023 and beyond as we work to improve industry-wide transparency, according to a spokesman. Following the demise of FTX, cryptocurrency companies have hurried to offer proof-of-reserves reports to reassure investors. Despite the limits of such reports, which are not a thorough audit, the crypto businesses frequently use them as proof that the funds of their clients are secure.

Providing certified proof-of-reserves from Mazars is “an crucial step…to promote openness and start the process of regaining trust,” according to this month. The major worldwide audit agency, Mazars, independently certifies that all user assets “correspond [one-to-one] to genuine reserves on the chain,” according to KuCoin, which claims this on its website.

An official five-page letter from a partner at Mazars’ South African subsidiary served as Binance’s proof of reserves report. It had three numbers but did not give an opinion, indicating that the auditor was not endorsing the figures.

If signoffs from accounting firms are misrepresented as audits—signoffs that might not even attest to the veracity of the few data being reported—reputational concerns result.

According to experts in the field, the FTX crash highlighted the risks that auditors face while participating in a situation that is mainly unregulated. The financial statements of FTX units were approved by two American accounting firms.

The audits of FTX Trading Ltd. and the considerably smaller FTX US conducted by Prager Metis CPAs LLC and Armanino LLP, respectively, cannot be trusted, according to John J. Ray, the exchange’s new CEO. Specifically in regards to FTX Trading Ltd., Mr. Ray stated last month that he had “serious concerns” about the information given in these audited financial statements.

Requests for comment from Prager Metis and Armanino were not immediately fulfilled. Both companies have affirmed in the past that they stand by their audit opinions.

Despite the fact that Coinbase Global Inc., one of the few publicly traded exchanges, has Deloitte as its auditor, larger auditing firms have mainly avoided working with cryptocurrency startups. Small to medium-sized accounting firms have performed the majority of proof-of-reserves and other attestation work for cryptocurrency companies, according to insiders in the sector.

A representative for Binance stated that the exchange has “reached out to many significant organizations, including the Big Four who are now refusing to conduct a [proof of reserves] for a private crypto company and we are still looking for a firm who will do so.”

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