- The auditing firm that confirmed Binance’s Proof-of-Reserves has suspended accounting activity for crypto exchanges.
- Binance is struggling to find an accounting firm that will conduct a Proof-of-Reserves report as they come under public scrutiny.
Proof-of-Reserve Issues
In the aftermath of the FTX collapse, crypto exchanges have come under intense public scrutiny regarding their solvency. As exchanges publish their Proof-of-Reserves (PoR) to reassure investors, the community has raised certain ‘red flags’ regarding the legitimacy of such reports.
Mazars, a multinational accounting firm that Binance appointed to conduct their PoR report, has now announced that they will temporarily suspend all accounting services for crypto exchanges.
“Mazars has indicated that they will temporarily pause their work with all of their crypto clients globally, which include Crypto.com, KuCoin, and Binance. Unfortunately, this means that we will not be able to work with Mazars for the moment,” Binance said in a statement on Friday. A spokesperson for Mazars has confirmed that this is the case.
Binance is still making strides to win investor confidence, with the CEO being more active than ever on Twitter:
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— CZ Binance (@cz_binance) December 16, 2022br/>Click edit button to change this html
Binance CEO tells Twitter how the mass withdrawals were not an issue for him.
In a recent statement on Friday, Binance claimed that they had approached multiple large firms, including the Big Four, and none of them are willing to conduct a PoR report for a crypto company.
Although no timeline has been given for further PoR clarity, Binance said:
“We embrace additional transparency and we are looking into how best to provide those details in the coming months”. Auditors and investors alike are understandably wary following the multiple aftereffects of the FTX collapse. Auditors have difficulty providing full auditing services, and investors have rushed to protect their funds from potential issues with Binance.
On the Flipside
- Binance has undertaken a ‘stress test’ from the community in regard to the mass withdrawals on the platform, and it performed well. The evidence is mounting that Binance holds all customers’ funds 1:1 and that they are unlikely to suffer a similar fate to FTX.
Why You Should Care
If Binance were to fall, the damage to the crypto industry would be significant – most likely setting us back many years. As the largest and most trusted crypto exchange, it’s imperative to the industry that they remain solvent. Only time will tell, but Binance seems to be making all the right decisions, and their transparency is a step above most crypto exchanges.