Audit Firm Halts Work With Crypto Clients
Over the last few weeks, the crypto world has had to do some serious accounting. Following the FTX scandal, several firms rushed to show their proof of reserves to anxious customers and assure them of their financial state. But even with this, there is still constant speculation about the financial state of various firms.
Well, it seems things are about to get even more complicated as Mazars, an audit firm, has announced that it will no longer work with several crypto firms, citing PR issues. Among the big names being dropped are KuCoin, Crypto.com, and Binance.
The Audit Scandal
The announcement comes as a bit of a surprise given that Mazars had worked with these firms for a while and seemed to be navigating the current landscape. But it is this same landscape that has led to its issues.
In an email sent out by the firm, it said that while it has been putting out proof of reserves for several of its clients, the crypto-buying public has not been convinced. It also expressed concern about the PR and media blowback from its association with them.
It is no secret that the crypto public has been very anxious about the state of the industry. Even when the reserves have been released from various exchanges, both its users and detractors heavily scrutinize them and speculate on their validity. And then there are those that are critical of the industry and have been quick to label the firms as fraudulent.
As such, any auditor that is associated with these firms might have PR issues on their hands and this seems to be what Mazars is trying to avoid. And according to reports, it is not just Mazars that is taking this stance.
Apparently, crypto firms have been trying to secure the services of one of the big four accounting firms to no avail. This development will not help the industry at all as it is currently facing a crisis of trust.
The FTX scandal and bankruptcies caused in its wake have rocked investor confidence and even companies in the space that had no connection to it have had to prove themselves. This was what led to the wave of proof of reserves releases we’ve seen in the last month.
But sadly, this has not fixed the confidence crisis but has rather forced the audit firm to pull away from companies in the space. And this development will also cast doubt on the exchanges themselves. Those who doubted the proof of reserves provided or believe the exchanges to be on the brink of collapse will take this departure as more evidence of their supposed dire state.
What Happens Now
As reports say, crypto firms have been unable to secure the big four accounting firms to handle their auditing and as such, will likely look elsewhere. And hopefully, the blowback from the current industry state will subside over time and will not reflect on them.