According to legendary investor Michael Barry, who inspired the movie The Big Short, audits of Binance and other cryptocurrency exchanges have failed because auditors do not know how to handle cryptocurrencies. , is “essentially meaningless”.
According to Burry, this is the same problem he faced when he started using “a new kind of credit default swap” in 2005. He said auditors at the time were “learning on the job” and this was “not a good thing.”
“The same goes for FTX, Binance, etc. Audits are inherently pointless,” Barry recently wrote on Twitter, sharing a screenshot of the news that global auditor Mothers would stop working with cryptocurrency firms. Did.
Reasons to believe in Barry
While some are concerned about moves by Mazars and others to stop working on cryptocurrencies, there is reason to believe Burry’s point that auditors simply don’t understand cryptocurrencies.
This notion aligns with what Binance CEO Changpeng Zhao (CZ) said in an interview with CNBC last week, pointing out that key auditors are simply new to cryptocurrencies.
“Many audit firms are afraid to work with cryptocurrency businesses.”
He added that he “doesn’t even know how to audit cryptocurrency exchanges,” a term that refers to the so-called “Big Four” companies, usually PwC, Deloitte, EY and KPMG.
So far, none of the four companies have commented on CZ’s remarks, but Deloitte is known to produce an annual audit report for Coinbase.
The main difference between Coinbase and Binance is that the former is a publicly traded company and is fully regulated in the US whereas Binance operates offshore and serves a larger global audience. is that
Watch a portion of CZ’s interview on CNBC below.