Audit Firm Mazars Ceases Reserve Proof Work for Binance and Others

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Global auditing firm Mazars has taken down the website that hosted proof of reserve works for cryptocurrency exchanges. The company told Bloomberg that it is suspending work with crypto firms on proof-of-reserve reporting in the future.

Mazars has appeared in crypto news a few times over the past few weeks as it started publishing these reports for cryptocurrency exchanges. The idea is that exchanges could reassure their users after the fall of FTX. Mazars also used Merkle trees so users can verify that their crypto assets are included in the report by entering a hash.

The auditing firm’s clients include Crypto.com and Kucoin. But the most important client was Binance. Mazars certified last week that Binance held enough bitcoin and wrapped bitcoin to cover all user balances on the exchange as of November 22 at 23:59 UTC.

But when Binance and Mazars announced the Proof of Reserves report for the exchanges’ bitcoin reserves, many people were quick to point out that this report only covered a small portion of Binances’ business.

This could be seen as a step in the right direction, but it doesn’t mean much when it comes to Binances handling all crypto assets across all of its products. Likewise, it is difficult to see if user assets are properly segregated from Binances’ own balance sheet.

Until Binance shares the full picture, it is impossible to say with 100% certainty that Binance currently holds user accounts in separate crypto wallets with no market exposure.

Mazars’ move doesn’t mean the reports were wrong. It just means that the auditing firm doesn’t think working with crypto companies for these reports is worth the risk. People have been paying a lot of attention to these reports, which means Mazars is putting its reputation on the line if one of these trades somehow fails.

Building trust takes a lot of effort, and those audit reports came a little too quickly after FTX collapsed. While this is a step in the right direction, proving that user assets are safe will require a more in-depth approach.

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