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According to Paul Munter of the U.S. Securities and Exchange Commission, the agencies’ acting chief accountant, the U.S. regulator is watching proof of reserves (POR) more closely. Warned investors to beware of some of the claims made by crypto companies, Munter told The Wall Street Journal (WSJ) on Dec. 22.
SEC Official Warns Investors They Should Beware Of Proof Of Reserve Audits And Crypto Exchange Claims
US regulators, and specifically the Securities and Exchange Commission (SEC), are taking a closer look at proof of reserves (POR) these days following the collapse of FTX. Speaking to the WSJ on Thursday, the SEC’s acting chief accountant Paul Munter explained that investors shouldn’t place much faith in POR audits and claims. The SEC is concerned that investors will feel reassured by the companies’ reports, the WSJ report details.
Warned investors to beware of some of the claims made by crypto companies, Munter explained. Investors shouldn’t place too much faith in the mere fact that a company claims to have obtained proof of reserves from an auditing firm, the SEC accountant pointed out. Munter continued:
[A POR audit] is not sufficient for an investor to assess whether the company has sufficient assets to cover its liabilities.
Munter’s comment follows the POR concept which has been gaining traction among crypto exchanges since the collapse of FTX. Companies like Okx, Binance, Crypto.com, Huobi and others have released POR audits, but some have sparked controversy. Additionally, on December 16, Bitcoin.com News reported on accounting firm Mazars Group after revealing that it will no longer provide crypto exchange audits. The Binances POR audit conducted by Mazars has also been removed from the web.
We’re increasing our understanding of what’s happening in the market, Munter told the WSJ. If we find patterns of facts that we find troublesome, we will consider a referral to the Enforcement Division.
Additionally, after Mazars Group said it would not offer POR audits to crypto exchanges, a spokesperson for auditing firm BDO said that week that it was considering what types of clients to take. in charge. Jeffrey Johanns, a professor at the University of Texas, believes that auditing firms are doing the right thing by being reluctant to offer auditing services to crypto companies. The big four companies have rightly decided on the risks [of auditing crypto companies] are extremely high, Johanns told the WSJ.
Keywords in this story accounting firms, auditing crypto firms, auditing firms, audits, BDO, Big Four firms, BTC Reserves, chief accountant, crypto exchanges, ETH Reserves, Exchange Reserves, Jeffrey Johanns, Mazars Group, PoR, POR audits, SEC, SEC investigation, SEC investigation, SEC investigation
What do you think of the SEC’s acting chief accountant and his comments on ROP audits? Let us know what you think about this topic in the comments section below.
Jamie Redman
Image credits: Shutterstock, Pixabay, Wiki Commons
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