SEC Launches Investigation into Cryptocurrency Registrars: Is Binance Targeting?

The U.S. Securities and Exchange Commission is concerned that investors may derive a false sense of assurance from audit firms’ reports. cryptocurrency accelerates the review of their work for their companies.

SEC Official: “Beware of Statements Made by Cryptocurrency Companies”

“We warn investors to be very wary of certain statements made by cryptocurrency companies,” Paul Munter, the SEC’s acting chief accountant, said in an interview.

The SEC’s increased scrutiny of these companies, bitcoin and at least one company that audited cryptocurrency exchanges and provided information about their assets and liabilities, causing it to no longer serve its crypto customers.

Cryptocurrency companies are known to be willing to work with audit firms for clients who have doubts about trust.

According to Munter, the SEC is closely examining how crypto companies display reports they receive from audit firms.

Many of these companies are tightly regulated or located offshore and are therefore unlikely to fall under the jurisdiction of the regulator. In addition to sending an effective warning to audit firms that do not want to conflict with their regulators, the SEC also warns investors:

“We are increasing our knowledge of what is going on in the market. We are increasing our knowledge of what is happening in the market. If we find data patterns that we think are problematic, we will consider referral to enforcement.”

The regulator is particularly concerned about proof-of-reserve reports that aim to show that the crypto company has enough assets to cover clients’ funds. Companies have moved to produce these reports in recent weeks, using the credibility of audit firms to reassure customers concerned about the collapse of crypto exchange FTX.

“Investors should not rely too heavily on a company saying it has only received proof of reserve from an audit firm,” Munter said. Having such a report is “not enough information for an investor to assess whether the company has enough assets to meet its obligations,” he added.

*Not investment advice.

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