Mazars, the accounting company that audits proof-of-reserve for crypto exchanges like Binance and CryptoCom, has halted all its work for crypto customers, Bloomberg reported on Friday.
Another auditing firm, Armanino, had earlier revealed plans to halt its audit work for crypto clients.
Mazars Pauses Auditing Services for Crypto Customers
Proof-of-Reserve (PoR) is a scheme introduced to verify the total funds held by a crypto company. It will also determine if the funds are sufficient to cover the entirety of users’ assets. Third-party firms usually conduct the PoR, and Mazars used to be one of them.
In November, the once giant crypto derivatives exchange FTX collapsed. Following the exchanges’ debacle, the authenticity of the proof-of-reserve for crypto exchanges has come under scrutiny.
Mazars is taking its latest move partly because members of the crypto market “haven’t been reassured by the “proof-of-reserves” reports it had published so far.”
A second reason for its action concerns the probe it can attract from the media, as it works for crypto-based firms.
“Mazars has indicated that they will temporarily pause their work with all of their crypto clients globally. Unfortunately, this means that we will not be able to work with Mazars for the moment,” a Binance spokesperson said.
Mazars’ History with Crypto Clients
Last month, Binance made the first move to release its proof-of-reserve audit for Bitcoin (BTC). Mazars served as the auditor for the crypto exchange. The accounting firm revealed that the BTC reserves for Binance were overcollateralized. Currently, the link to the audit statement on Mazars’ website is no longer available.
Earlier this month, Mazars conducted an audit statement for the crypto firm CryptoCom. The assessment showed that CryptoCom had sufficient funds backed by 1:1 to users’ funds.
Other crypto custodians, like KuCoin, Kraken, OKX, and others, have followed the same path, releasing their PoR audit with different auditing firms.
Not the First
Mazar is not the first to make a move to halt its services rendered to crypto firms. Yesterday’s report by Forbes showed that U.S.-based auditing firm Armanino is also working to end its audit services for crypto clients.
Armanino used to be the auditing firm for FTX.US and Kraken. After the financial fallout of FTX and its sister companies, the accounting firm got tangled in a lawsuit charge involving FTX. This raised questions about the “reputational risk” the crypto auditing service will have on Armanino.
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