Report: SEC Heightens Probe Into Auditors Servicing Crypto Exchanges
According to the U.S. Securities and Exchange Commission’s Paul Munter, the agency’s acting chief accountant, the U.S. regulator is monitoring proof-of-reserves (POR) more closely. “We’re warning investors to be very wary of some of the claims that are being made by crypto companies,” Munter explained to the Wall Street Journal (WSJ) on Dec. 22. SEC Official Warns Investors Should Be ‘Wary’ of Proof-of-Reserve Audits and Crypto Exchange Claims
U.S. regulators, and more specifically the Securities and Exchange Commission (SEC), are looking more closely at proof-of-reserves (POR) these days following the collapse of FTX. Speaking with the WSJ on Thursday, SEC’s acting chief accountant, Paul Munter, explained that investors should not put much faith in POR audits and claims. SEC is concerned that investors “may be getting a false sense of reassurance from the firms’ reports,” the WSJ report detailed.
“We’re warning investors to be very wary of some of the claims that are being made by crypto companies,” Munter explained. “Investors should not place too much confidence in the mere fact a company says it’s got a proof-of-reserves from an audit firm,” the SEC accountant stressed. Munter continued: [A POR audit] is not enough information for an investor to assess whether the company has sufficient assets to cover its liabilities.
The commentary from Munter follows the POR concept gaining traction among crypto exchanges since FTX collapsed. Companies like Okx, Binance, Crypto.com, Huobi, and others have released POR audits but some were met with controversy. Furthermore, on Dec. 16, Bitcoin.com News reported on the accounting agency Mazars Group after it revealed it would no longer provide crypto exchange audits. Binance’s POR audit completed by Mazars was also removed from the web.
“We are increasing our understanding of what’s going on in the marketplace,” Munter told the WSJ. “If we find fact patterns that we think are troublesome, we will consider a referral to the division of enforcement.”
Additionally, after Mazars Group said it would not offer POR audits to crypto exchanges, a spokesperson for the auditing firm BDO said that week it is contemplating which kinds of customers to take on. University of Texas professor Jeffrey Johanns believes auditing firms are doing the right thing by being reluctant to offer crypto firms auditing services. “The Big Four firms have…rightly decided the risks [of auditing crypto companies] are extremely high,” Johanns told the WSJ. Tags in this story accountancy firms, auditing crypto firms, auditing firms, audits, BDO, Big Four firms, BTC Reserves, chief accountant, crypto exchanges, ETH Reserves, Exchange Reserves, Jeffrey Johanns, Mazars Group, PoR, POR audits, SEC, SEC inquiry, sec investigation, SEC probe
What do you think about the SEC’s acting chief accountant and his comments about POR audits? Let us know what you think about this subject in the comments section below. Jamie Redman
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. Caroline Ellison"s Testimony Claims FTX Boss SBF Directed Her to Co-Mingle Customer Funds Since 2019 NEWS | 1 hour ago FTX Attempts to Freeze Robinhood Shares as Creditors Swarm to Scoop $450M in HOOD Stock NEWS | 5 hours ago
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