The US Securities and Exchange Commission (SEC) has initiated legal action against Prager Metis, the auditor of the now-bankrupt cryptocurrency exchange FTX, over alleged violations concerning auditor independence. The SEC claims that Prager Metis failed to maintain the necessary independence while providing auditing services, intertwining auditing and accounting services instead of keeping them separate, as required to avoid conflicts of interest. This breach of protocol reportedly spanned nearly three years.
Although the SEC's statement does not directly name FTX, it hints at "hundreds" of violations over the three-year period. FTX had engaged Prager Metis for auditing services in 2021, and by November 2022, the crypto exchange had declared bankruptcy. Senators Elizabeth Warren and Ron Wyden have voiced concerns about Prager Metis' impartiality, suggesting the firm acted more as a crypto industry advocate than an independent auditor.
The SEC's legal action against Prager Metis highlights the importance of maintaining auditor independence. With FTX's bankruptcy and the surrounding controversies, the crypto industry faces increased scrutiny. The case serves as a reminder of the critical role auditors play in ensuring transparency and trust in the financial world.
Although the SEC's statement does not directly name FTX, it hints at "hundreds" of violations over the three-year period. FTX had engaged Prager Metis for auditing services in 2021, and by November 2022, the crypto exchange had declared bankruptcy. Senators Elizabeth Warren and Ron Wyden have voiced concerns about Prager Metis' impartiality, suggesting the firm acted more as a crypto industry advocate than an independent auditor.
The SEC's legal action against Prager Metis highlights the importance of maintaining auditor independence. With FTX's bankruptcy and the surrounding controversies, the crypto industry faces increased scrutiny. The case serves as a reminder of the critical role auditors play in ensuring transparency and trust in the financial world.