Accounting firm Mazars drops all crypto clients, including Binance and Crypto.com

According to a spokesperson for Binance, the French accounting firm Mazars is halting all its work with crypto firms including Crypto.com, KuCoin and Binance.

Mazars has since removed all crypto reports from its website.

In a statement, Mazar’s spokesperson told Yahoo Finance the firm “has paused its activity related to the provision of Proof of Reserves reports to entities in the cryptocurrency sector due to concerns about how these reports will be perceived by the public.”

Mazars noted: “Evidence of reserves reports is performed in accordance with the relevant reporting standards for an agreed procedures report. They constitute neither assurance or audit opinion on the subject matter. Instead they are limited conclusions based on agreed procedures. Let’s report the subject matter at a historical point in time.”

Mazars’ decision was first reported by Bloomberg. Mazars’ withdrawal from the crypto market comes as customers and investors seek more transparency around the crypto exchanges they use following the collapse of FTX.

Investors have turned their attention to the largest crypto exchange, Binance, after last week delivered a report from Mazars that fell short of showing full transparency. The exchange temporarily halted withdrawals of USDC stablecoins, citing a lack of daily banking hours during the record period for withdrawals.

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Analysts and other market participants had previously criticized Mazars’ reports, as the accounting firm would not give an opinion on the validity of its clients’ financial information or assurance conclusions.

“Unfortunately, this means we will not be able to work with Mazars at this time,” Davy Mustajab, Head of Global Communications for Binance, shared with Yahoo Finance.

Zhao Changpeng, Founder and CEO of Binance, attends the VIVA technology conference dedicated to innovation and startups, at the Porte de Versailles exhibition center on June 16, 2022 in Paris, France.  Reuters / Benoit Tessier

Zhao Changpeng, Founder and CEO of Binance, attends the VIVA technology conference dedicated to innovation and startups, at the Porte de Versailles exhibition center on June 16, 2022 in Paris, France. Reuters / Benoit Tessier

Crypto.com, which incorporated Mazars in November and published its report on December 7th, could not address the accounting firm’s decision to hold out, but said: “We will continue to engage with reputable audit firms in 2023 and continue to increase transparency.” Will try. Across the industry.”

KuCoin, which had proof of the reserve report by Mazars published on December 8, also said it is “open to working with any major and reputable auditor,” according to a spokesperson.

Following this news, crypto markets were broadly under pressure, with bitcoin falling below $17,000; Earlier this week, bitcoin climbed above $18,000 for the first time since the collapse of FTX.

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According to data from Binance and CryptoQuant, between Monday and Wednesday, Binance saw outflows totaling $6 billion, its largest customer withdrawal period since 2020. However, against the ratio of its reserves, the company has live up to Big waves of withdrawals in 2021 and 2020, according to CryptoQuant data.

On Wednesday, Binance CEO Changpeng Zhao spoke on Twitter Space, calling the moment a “stress test,” though not providing the necessary reassurance to investors.

Zhao said that proving asset reserves is “not as simple an exercise as people think” and that the company will present more details “in the coming weeks”.

Zhao went on to outline what a worst-case scenario for Binance should look like. “As long as we fail honorably and credibly, we let people withdraw their money because the company ran out of funds, that’s fine,” he said.

Crypto exchanges are increasingly becoming defensive as FTX revealed it mixed with client funds affiliated with its sibling hedge fund, Alameda Research.

Under new management, FTX is looking to sell four parts of its business in Chapter 11, according to reports, leaving what its new CEO said during congressional testimony Tuesday left a more than $7 billion hole.

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According to a report by blockchain analytics platform CryptoQuant, while a true financial audit is paramount, Binance’s financials are at least not as precarious as those of FTX.

Reportedly, CryptoQuant was able to verify Mazar’s report, which shows that Binance’s bitcoin holdings are entirely collateralized. It also said that the company was not showing “FTX-like” behavior, meaning that its assets were not transferred to non-Binance wallets. According to the findings, Binance also has “clean reserves,” meaning that the proportion of its own proprietary token, BNB, “is still a low proportion of its assets.”

“Our analysis should not be interpreted as a favorable opinion of Binance as a company, the ecosystem of the BSC/BNB network, or the BNB token itself. It is merely an indication that the amount of BTC Binance Exchange says it is meeting its liabilities. As per the on-chain data the moment the PoR report was conducted, it makes sense,” CryptoQuant said in its report.

David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrency and stock markets. follow him on twitter @DsHollers

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