➡️ The #SEC 's chief accountant, Paul Munter, stated that auditing firms may be held liable when assessing the finances of crypto businesses.
➡️ Specifically, Paul Munter recalled the crashes and payment crises of many crypto projects over the past year. Therefore, he said that the audit unit has become a new concern of projects, especially at exchanges, to build trust with users.
➡️ Munter argues that audit firms may be held liable for statements made to clients. Under anti-fraud laws, an auditor must not mislead a client about the extent of financial judgment or the “scope of work” performed by an accounting firm.
➡️ In addition, he warned that anyone knowingly or unknowingly assisting another in violation of a Securities Act or Exchange Act provision would be deemed to be in violation of that provision. In response, SEC Commissioner Hester Peirce concurred that crypto platforms and accounting firms need to clarify what Proof-of-Reserves is and the limitations of this audit report. However, she criticized Munter's proposal as limiting efforts to make the crypto market transparent.
➡️ In the wake of recent cryptocurrency scandals and payment problems, the market is gradually seeking credibility from audit firms, especially exchanges, when they need to prove themselves. transparency on asset holding. Some cryptocurrency exchanges and other companies advertise that they are fully audited by third-party companies, usually accounting firms like Mazars.
➡️ Besides, many exchanges have published proof of holding customer assets, also known as Proof-of-Reserves (PoR). The top three exchanges participating in this program, Binance, #KuCoin and #crypto., have partnered with French auditing firm Mazars, and the published results all show asset reserve ratios of 100% or more. .
➡️ However, many analysts, legal consultants, and user communities have criticized Mazars' audits as being very superficial, most of which are based solely on data provided by the exchange and not independently researched. . Paul Munter also made a statement that proof of a PoR reserve should not be fully trusted.
➡️ Mazars has faced strong criticism and is no longer providing audit services for crypto exchanges, removing the report from their website by the end of 2022.
➡️ After that, the auditing firm Armanino also announced to stop cooperating with #ftx .us and Kraken. Efforts to find an audit partner for Binance have also been difficult, and even major auditing firms (Big4) have refused to cooperate with #Binance .
