What is Mazars? Meet the accounting firm rocking the crypto world that previously ditched Trump

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Mazars made headlines again this year after confirming its break work for crypto clients including Crypto.com, KuCoin and Binance, the world’s largest crypto exchange.

The news that is rocking the cryptocurrency world comes after the accounting firm pulled out of another high-profile client, former President Donald Trump, in February.

On Friday, Mazars told Yahoo Finance that it “has suspended its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency industry due to concerns about how these reports are understood by the audience”.

Here’s what else you need to know about the accounting firm.

Exterior view of the tower housing the headquarters of Mazars, an audit and consulting firm located in the Paris-La Défense business district

What is Mazars?

Mazars is an international professional services firm that provides various financial services, including audit (49%), tax (16%) and outsourcing (16%), according to the firm’s 2020/2021 Transparency Report.

It operates in 90 countries but the majority of its offices and professionals are located in the European region. Mazars has 12 offices in the United States, including California, New York, Texas and Florida.

In 2021, Mazars reported commission income of $2.22 billion ($2.1 billion).

What services has Mazars provided to crypto businesses?

Mazars has released Proof of Reserve (PoR) reports for cryptocurrency exchange clients. The purpose of PoR reports is to verify that there are sufficient assets held by exchanges to secure client balances.

This is something that is being mentioned more and more since the collapse of FTX, said Romain Dillet, senior writer at TechCrunch. Basically, it’s like saying, here’s what I have in my wallet and here’s what my clients hold on my exchange.

Ultimately, exchanges wanted to provide customers with assurance.

If everyone tries to withdraw everything at once, exchanges with reserves greater than customer deposits will be able to process all withdrawal requests, Dillet said.

For example, Binance explained its PoR system after the FTX fallout on its site and showed a Bitcoin reserve ratio of 101%. Crypto.com also posted its Mazars PoR report on its website with an option to verify client funds.

The story continues

However, the Mazars PoR report specifically noted that these are not financial audit engagements and that the firm does not express an assurance opinion or conclusion.

The Mazars report on the Binances BTC reserve is no longer available on the companies’ website. Mazars has removed all proof of reserve reporting for cryptocurrency exchanges, according to TechCrunch, and Mazars does not currently list cryptocurrency or blockchain technology as industries it serves on its website.

Why did Mazars back down?

After releasing PoR reports for Cyrpto.com and KuCoin earlier this month, Mazars said it was suspending those reports due to concerns over how the reports are interpreted by the public, according to a statement it made. provided to Yahoo Finance.

Proof of reserves reports are conducted in accordance with relevant reporting standards for an agreed-upon procedures report, according to the statement. They do not constitute an assurance or an audit opinion on the subject. Instead, they report limited conclusions based on agreed-upon procedures performed on the subject at a historical time.

What was Mazars’ relationship with Trump?

TOPSHOT – Former US President Donald Trump

Earlier this year, Mazars severed ties with another notable client, former President Donald Trump and his family business.

Trump used Mazars as a longtime accounting firm, its services included issuing financial disclosure statements for the former president. These statements included appraisals of Mr. Trumps assets, including real estate. However, in a letter to the Trump Organization in February, William Kelley, general counsel for Mazars in the United States, said Trump’s financial statements from June 30, 2011 through June 30, 2020 should no longer be relied upon.

The accounting firm also said it would no longer provide services to Trump and his businesses.

What is the legal liability of accounting firms?

Mazars, like all other accounting firms and its CPAs, is bound by standards such as good faith, professional care and the public interest.

Companies have a legal responsibility to ensure that financial statements are presented correctly. Otherwise, clients, investors, or third parties who rely on their work may sue for negligence or fraud.

In the past, accounting firms have collapsed due to bad audits. Arthur Andersen, once a Big 5 accounting firm with PwC, KPMG, EY and Deloitte, collapsed in 2002 due to its involvement in the Enron scandal.

Workers remove the sign of accounting firm Arthur Andersen from their offices in Sydney’s central business district May 21, 2002.

Andersen closed his eyes when Enron Corp. made financial misrepresentations to mislead investors. The lead audit partner did not report the issues to the company’s board of directors and attempted to cover up the fraud as part of an investigation by the Securities and Exchange Commission.

Mazars reminded the Trump Organization that Mazars performed its work in accordance with professional standards in its separation letter in February. Mazars again reminded the public of its adherence to reporting standards by suspending cryptocurrency-related work.

Mazars did not provide further information about its suspension decision to Yahoo Finance.

Rebecca is a reporter for Yahoo Finance.

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