On Friday, December 16, audit firm Mazars Group, which submitted its proof-of-reserve report for Binance, suspended all ties to crypto companies. Mazars Group said they are shutting down activity “for entities in the cryptocurrency industry due to concerns over the way these reports are understood by the public.” Burry, who predicted the 2008 crisis and inspired a movie called “The Big Short”, made statements about the Binance report and FTX. Here are the details…
Michael Burry: Controls are pointless
cryptocoin.com As we reported, auditing and accounting firm Mazars has suspended auditing service for Binance and other cryptocurrency companies. Because recently several doubts have arisen regarding the incomprehensibility of the report. Commenting on this, Big Short investor Michael Burry said the audits were essentially pointless. “That’s the problem,” Burry said. When he started using a new type of default swap in 2005, he explained what auditors learned on the job. “This is not a good thing,” he said. “The same goes for FTX, Binance,” he said. He stated that the audit was essentially meaningless.
Binance CEO Changpeng Zhao recently stated that audit firms are not willing to work with crypto businesses. He also added that several auditing firms do not know how to audit crypto exchanges, user accounts and different blockchains. Zhao used the following statements:
There are several audit firms that audit FTX and they have been criticized for giving a stamp of approval and I don’t know how they do the audits. But inspections don’t reveal every problem.
Is Binance too big to fail?
With the collapse of crypto exchange FTX, Binance is now the only major global exchange of choice for trading crypto assets. The exchange is currently facing turmoil as US regulators file criminal charges against Binance executives. This, combined with other news such as improper audit reports and large withdrawals, has investors worried. Mark Lurie, CEO and co-founder of Shipyard Software, which builds decentralized exchanges, said:
I don’t think Binance is trying to cause trouble, but this organization is now a risk to all of us. Whenever you have a player controlling a significant amount of volume, there are many systematic risks.
Tennessee Senator Bill Hagerty also stated that an FTX-like collapse of Binance “would be disastrous for the cryptocurrency industry.” He even said that “it would be disastrous for all consumers using the industry.” However, CZ reiterated several times that the stock market is financially strong. He also said that after the last withdrawals, the deposits started to come back.
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