According to a Thursday report by The Wall Street Journal, the Securities and Exchange Commission is increasing its scrutiny of auditing firms and their reports concerning crypto companies to ensure that investors receive accurate information.
The SEC's concern is that investors could get the wrong impression from these audit reports. Acting Chief Accountant Paul Munter said that market participants should be "wary" of some claims made by cryptocurrency companies.
In response to several confidence issues within the industry stemming from the collapse of FTX, certain cryptocurrency businesses rushed to obtain proof-of-reserves reports. However, these "audits" attracted plenty of skepticism since they do not show the whole picture.
Mazars, Binance's auditor, has abandoned its work with crypto companies, causing more market turmoil. Notably, it refused to vouch for the company's financial health. Others are altering their approach to new clients with an emphasis on being more cautious. Jeffrey Weiner, chairman and CEO at Marcum LLC, said that his firm views the cryptocurrency industry as high risk.
Jeffrey Johanns, a professor at the University of Texas, told the Wall Street Journal that risks associated with auditing crypto businesses are particularly high, hence, major firms are choosing to ignore the industry. Binance, for instance, is still searching for another auditor as its finances remain a black box.
Denys Serhiichuk
Tomiwabold Olajide
