A senior official from the U.S. Securities and Exchange Commission (SEC) urged investors to be “very cautious” about relying on “proof-of-reserve reports” submitted by cryptocurrency exchanges.
SEC deputy chief accountant, speaking to The Wall Street Journal (WSJ) Paul Muntergave clear advice to investors to “trust little” to proof-of-reserve reports shared by crypto companies.
Munter also shared the “so-called financial reports” that he examined more closely and expedited review. stated.
Investors should not rely too heavily on crypto companies saying they have received proof of reserve from an audit firm. This is not enough information for an investor to assess whether the company has enough assets to meet its obligations.
As known of FTX the world’s largest cryptocurrency exchange Binance including transparency and trust The “proof of reserve report” trend has started. However, while the accuracy of these reports is being discussed more and more each day, the auditor assigned to verify the reports of many exchanges. mazars‘s announcement that it is withdrawing from the crypto sector has raised concerns.
Noting all this uncertainty and chaos, Munter warned that the SEC would consider referral to enforcement if it finds “patterns of troublesome facts” in exchanges’ reserve situations.
According to the WSJ report, Binance continues its search for a new auditor firm. The latest statements from Binance are “we have reached out to several large firms including the Big Four (Deloitte, EY, KPMG and PwC) that currently do not want to provide proof of reserve for crypto companies“It was in the direction.
At the beginning of December, a former executive of the SEC John Reed StarkPointing to the proof-of-reserve report released by Binance, “Red flagHe stated that he removed it.