Binance, the world’s largest cryptocurrency exchange, has announced that its auditor, Mr. Mothers, has stopped trading.
The exchange, which was hit by $6 billion in withdrawals this week, said in a statement that its French audit firm had “temporarily” suspended work with all cryptocurrency customers, including Binance.
A webpage linking to Mathers’ work on Binance’s Proof of Reserve (proof that it can finance customers’ funds) was unavailable on Friday morning.
Mazars’ exit follows the bankruptcy of one of Binance’s rivals, FTX, last month and the arrest of FTX founder Sam Bankman-Fried on Monday.
Binance customers have been scrambling to withdraw funds from the exchange, with a spokesperson revealing that they have returned a total of $6 billion this Monday, Tuesday and Wednesday.
A Binance spokesperson said Binance managed withdrawals “without breaking its stride,” but on Tuesday the exchange suspended withdrawals of the stablecoin USDC after depleting assets in its reserves. But efforts to stem the bank run are working, he said.
Question-and-answer session
What is a stablecoin?
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A stablecoin, as the name suggests, is a type of cryptocurrency that is supposed to have a stable value, such as US$1 per token. There are various ways they achieve it.The largest such as Tether and USD Coin are effectively banks. They hold large reserves in cash, liquid assets, and other investments, and their We use reserves to keep prices stable.
Others, known as “algorithmic stablecoins,” attempt to do the same, but without reserves. has been criticized for being backed by
Stablecoins are an important part of the cryptocurrency ecosystem. They provide a safer place for investors to store their capital without the hassle of fully cashing out, and they encourage investors to denominate their assets in traditional currencies rather than other highly volatile tokens. Make it possible.
“Ultimately, users want to know that their funds are safe and that our business is financially sound,” said the spokesperson.
“To that end, Binance’s capital structure is debt-free, and over the past week, Binance should have passed the stress test, giving the community an extraordinary sense of security that their funds are safe. Despite the massive withdrawals on the 14th, we had $6 billion in net withdrawals over the three days, but we were able to make good progress.”
Binance said in a statement that Mazars has also suspended trading with other cryptocurrency clients. We reached out to Mazars for comment.
Mazars had worked with Binance, but the company fell short of conducting a full audit of the exchange. Instead, the document produced by Mazars, known as the ‘reserve report’, was prepared using a method known as the ‘agreed procedure’.
In the case of Binance, that meant examining the company’s reserves, but not its debt claims. Binance CEO Changpeng Zhao said the company has “no loans.”
A Binance spokesperson added that the exchange has “reached out to multiple large companies,” including the “Big Four” accounting group, but they are “currently unable to hold private crypto company reserves. “We are still looking for companies that do,” the spokesperson added.
Crypto companies regularly fall short of full audits. His provider Tether, the controversial stablecoin he claims has over $70 billion in reserves backing the cryptocurrency, has produced a quarterly “reserve statement.” time. The company touts its cooperation with his BDO, a ‘Big 5’ audit firm that is not part of the traditional accounting ‘Big 4’.
On Thursday, it was reported that auditing firm Armanino, a medium-sized American auditor, will end its cryptocurrency auditing operations once and for all after approving the accounts of FTX’s supposedly ring-fenced American subsidiary.
Auditors fear the resulting reputational risk could harm non-crypto businesses. According to Forbes, a class action lawsuit against the closed exchange was filed by his FTX customers who claimed to have lost $20,000, resulting in the decision to exit the cryptocurrency business.
