Auditing firms have begun to refuse to work with companies from the cryptocurrency industry. Thus, the Mazars auditors, who recently checked the reserves of Binance, suspended the checks of crypto companies. The firm Armanino, which worked with FTX, also stops the practice of crypto-audit and refuses clients.
Mazars Group, a French audit firm that Binance, KuCoin, Crypto.com and other major industry players have been contacting to verify their reserve assets, has stopped all work with crypto clients due to markets not trusting its “proof of reserve” reports. Bloomberg reports citing a letter received from Binance.
A spokesman for Mazars told the publication that the company would make a statement in due course and declined to comment further. The website hosting Mazars reports for crypto clients is currently down.
Another audit company, Armanino, which has been working in the crypto industry since 2014, also stops the practice of crypto auditing and refuses clients, Forbes writes , citing sources familiar with the matter. According to them, the division of the firm that worked with crypto clients may be curtailed under pressure from Armanino's non-crypto clients. These clients are concerned that reputational risk to the firm will cast doubt on their audits.
Armanino, which previously audited the OKX and Gate exchanges, was named a defendant in a class-action lawsuit in November 2022 for failing to detect violations on FTX.US after auditing the exchange last year, the article says. The class action lawsuit was filed by Stephen Pierce, an FTX client who he claims lost $20,000.
Many accounting firms are afraid to work with crypto companies, Binance CEO Changpeng Zhao told CNBC on Thursday. When asked why Binance did not involve an auditor from the Big Four (PwC, Deloitte, EY and KPMG), Zhao replied that such firms “do not even know how to audit crypto exchanges.”
The Mazars audit report on Binance reserves, published on December 7, drew criticism and sowed some panic in the crypto community. Exchange clients began to withdraw funds, and the BNB token rate began to fall. Changpeng Zhao warned employees about the onset of a difficult period, urged them not to pay attention to rumors and assured that the exchange would “survive any crypto winter.”
SOURCE: Bloomberg