Investing.com – Cryptocurrency prices plunged on Friday after new developments called into question the reliability of reserve data provided by the world’s largest stock exchange.
Bloomberg reported that Binance previously said tax and accounting firm Mazars, which published a controversial opinion on Binance’s reserves last week, has suspended all work with the cryptocurrency sector. Its other clients include KuCoin and Crypto.com, an exchange promoted by Hollywood star Matt Damon and others.
“Mazars has announced that it is temporarily suspending all its crypto clients worldwide. – Bloomberg quotes a representative of Binance. “Unfortunately, this means that we will not be able to work with Mazars at the moment.”
The news removed one of the key pieces of evidence from Binance founder and CEO Changpeng Zhao’s repeated claims that the exchange is properly handling its clients’ deposits, prompting concerns from the crypto community that have flared after the collapse of rival exchange FTX in November. FTX has embezzled more than $8 billion in client funds to cover losses from its hedge fund affiliate Alameda Research, according to fraud allegations uncovered this week in the United States.
The link to the document provided by Mazars has been deactivated on the Binance website.
Mazars said at the time that data provided to him by Binance indicated that the exchange’s available reserves exceeded its commitments to customers, confirming repeated claims by Binance CEO and founder Changpeng Zhao. However, the company added important caveats to its assessment, noting that it was operating under specific restrictions imposed by the exchange and was unable to verify all data with third parties. Therefore, an attestation cannot be considered an audit, which typically includes confirming company data on matters such as filing agreements with relevant third parties.
While this is hard to see as a good thing for cryptocurrencies in any sense, some have noted that Mazars’ actions still leave many questioning Binance’s true credibility.
Jeff Dorman, chief investment officer of digital asset platform Arca, said in a social media post reposted by Zhao that Binance was trapped in “guilty until proven guilty,” adding that “for Binance (or any other exchange) it is almost impossible to prove one’s innocence in a timely manner”.
Dorman says auditors’ sensitivity to reputational damage has increased since the collapse of Enron 20 years ago effectively wiped out Arthur Andersen, one of the largest accounting firms in the world.
“If you’re on the assumption that ‘no audit is a bad agent,’ then you should consider that ‘no audit can mean that auditors are afraid of making a mistake,'” Dorman said.
As of 5:55 AM ET (1055 GMT), it was down 3.6% to $17,065, reversing all gains for the week. it fell 6.0% to $1,209.37.
Written by Geoffrey Smith
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