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

[ad_1]

French accounting firm Mazars is suspending all work with crypto companies, including Crypto.com, KuCoin and Binance, according to a Binance spokesperson.

Mazars has since removed all crypto reports from its website.

In a statement, a spokesperson for Mazars told Yahoo Finance that the company “has suspended its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency industry due to concerns about the manner whose reports are understood by the public”.

Mazars noted: “Proof of reservations reports are made in accordance with reporting standards relevant to an agreed-upon procedures report. They do not constitute assurance or an audit opinion on the subject matter. Instead, they report limited findings based on agreed procedures performed on the subject at a historical time.”

News of Mazars’ decision was first reported by Bloomberg. Mazars’ withdrawal from the crypto market comes as clients and investors seek greater transparency regarding the crypto exchanges they use following the collapse of FTX.

Investors shone a spotlight on Binance, the largest crypto exchange, after it released a report from Mazars last week that failed to show full transparency. The exchange also temporarily halted withdrawals from the USDC stablecoin citing daily banking hour constraints during a record period of withdrawals.

Analysts and other market participants had previously criticized Mazars’ reports because the accounting firm would not offer an opinion on the validity of their clients’ financial information or an assurance conclusion.

“Unfortunately, this means that we will not be able to work with Mazars at this time,” Dewi Mustajab, global communications manager 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 in Paris, France June 16, 2022. REUTERS/Benoit Tessier

Crypto.com, which engaged Mazars in November and released its report on December 7, could not respond to the accounting firm’s decision to take a break, but said, “We will continue to engage with investment firms. reputable audit in 2023 and beyond as we seek to increase transparency. throughout the industry.”

The story continues

KuCoin, which had a proof of reserve report released by Mazars on Dec. 8, also said it was “open to working with any high-profile and reputable auditor,” according to a spokesperson.

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

Between Monday and Wednesday, Binance saw a total of $6 billion in outflows, its largest period of client withdrawals since 2020, according to data from Binance and CryptoQuant. However, relative to its reserve ratio, the company has weathered larger waves of withdrawals in 2021 and 2020, according to data from CryptoQuant.

On Wednesday, Binance CEO Changpeng Zhao spoke on Twitter Spaces, calling the moment a “stress test,” but perhaps not offering the reassurance investors needed.

Zhao said proving asset reserves “isn’t as simple an exercise as people think” and the company will release more information in the coming weeks.

Zhao then explained what Binance’s worst-case scenario should look like. As long as we fail honorably and credibly, we let people withdraw their funds because the company is out of money, that’s fine, he said.

Crypto exchanges have been increasingly on the defensive since FTX revealed that it mixed client funds with those belonging to its sister hedge fund, Alameda Research.

Under new management, FTX is seeking to sell off four parts of its Chapter 11 business, according to reports, in a bid to recoup what its new CEO said during congressional testimony on Tuesday was a $7 billion-plus hole. dollars.

While a proper financial audit is paramount, Binance’s financial situation is, at least, not as precarious as FTX, according to a report by blockchain analytics platform CryptoQuant.

According to the report, CryptoQuant was able to verify Mazars’ report, showing that Binance’s bitcoin holdings are fully collateralized. He also said that the company did not show “FTX-like” behavior, meaning that its assets were not moved to non-Binance wallets. According to the findings, Binance also has a “clean reserve”, meaning that the proportion of its own proprietary token, BNB, is “still a small proportion of its assets”.

“Our analysis should not be construed as a favorable view of Binance as a company, the BSC/BNB networks ecosystem or the BNB token. It is merely a sign that the BTC trade amount Binance says that it holds as a liability at the time the PoR report was made makes sense, according to on-chain data,” CryptoQuant said in its report.

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

Click here for the latest crypto news, updates, values, prices and more regarding Bitcoin, Ethereum, Dogecoin, DeFi and NFT

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube

[ad_2]