Mazars suspends services to crypto clients

Auditing firm Mazars Group has halted work with all crypto-industry clients following Binance’s bitcoin reserve review. Bloomberg, citing the exchange, reports.

“Mazars has signalled that it is temporarily ceasing services to all crypto clients, including Crypto.com, KuCoin and Binance. Unfortunately, this means that at the moment we cannot work with the firm,” said a platform representative.

Earlier, experts criticised Mazars’ report published in early December on Binance’s reserve review. It concerned the volumes of user bitcoin deposits and the presence of corresponding reserves at the platform.

The auditor-confirmed data gave the exchange grounds to claim 101% reserve coverage.

However, experts noted that the actual snapshot did not prove the safety of clients’ assets. Mazars’ work was not a full audit and did not verify, for example, the effectiveness of Binance’s internal-control systems, they say.

John Reed Stark, president of John Reed Stark Consulting, called the results of the review “alarm bells”.

Mazars also published a reserve report for the Crypto.com cryptocurrency platform and announced a similar audit of the KuCoin exchange.

According to Forbes, another auditing firm — Armanino — is also ceasing work with crypto companies. It is under pressure from clients not tied to the digital assets industry. They are concerned about reputational risks that could cast doubt on their audit, according to sources cited by the publication.

Armanino has been working with crypto companies since 2014, but, according to insiders, may close the corresponding unit.

“Our industry office serves companies providing financial services for digital assets, miners and stakers, funds, token projects and ‘crypto-curious’ companies in various ways to meet the industry’s unique needs,” the service’s webpage says.

After the FTX collapse in November 2022, a class action was filed against the firm. In 2021 Armanino audited the exchange’s US arm and found no violations.

Against the backdrop of the FTX collapse, Binance disclosed information about its cryptocurrency reserves. The company also launched a feature Proof-of-Reserves, which allows users to verify that their bitcoin holdings on the platform are backed by the assets.

CryptoQuant analysts confirmed the accuracy of the data presented in Mazars’ Binance reserves audit.

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