Accounting Firm Mazars Pauses Work With Crypto Clients

Global accounting firm Mazars is pausing its work with all cryptocurrency clients [Editor's note: the link may be paywalled; alternative source] worldwide, soon after it published several "proof of reserve reports" for digital-asset platforms. From a report: Earlier this month, a five-page letter from a partner at the South African affiliate of Mazars reported on the crypto exchange Binance's bitcoin assets and bitcoin liabilities. The letter wasn't an audit report, didn't address the effectiveness of the company's internal financial-reporting controls, and said Mazars did "not express an opinion or an assurance conclusion," meaning it wasn't vouching for the numbers.

Such a strange document

[Bill, Shooter of Bul]

"Here are numbers the company told us, but we have not checked and will not check" That's an obvious abuse of their reputation by one of their partners. Any crypto company is going to use that on less sophisticated fools to extract money from them. Their decision absolutely makes sense. And its terribly ironic about how much crypto enthusiast moan about transparency, and trackability when the reality is you can't even audit them. Crypto is great for fraud, I'll give it that.

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[quantaman]

"Here are numbers the company told us, but we have not checked and will not check" That's an obvious abuse of their reputation by one of their partners. Any crypto company is going to use that on less sophisticated fools to extract money from them. Their decision absolutely makes sense. And its terribly ironic about how much crypto enthusiast moan about transparency, and trackability when the reality is you can't even audit them. Crypto is great for fraud, I'll give it that.

I'm definitely not an accountant, but I think there's two general classes of certification style things that businesses go through.

First, is the business does it itself. They're given forms to fill out and, the agency does analysis based on those forms. If the forms are inaccurate the agency is likely in the clear, but if the business is lying then they (and maybe the folks who signed the forms) become liable.

Second is an audit. In that case the agency goes in and starts poking about to check things themsel

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[Bill, Shooter of Bul]

Thanks for the explanation. I have only a tangential relationship to accountants, but those I do are the ones that do full crazy audits with site visits counting inventory in warehouses.

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[SchroedingersCat]

It is impossible to audit crypto reserves. There is no way to verify ownership of crypto wallets. The company says: "here is crypto wallet with 10mil worth of bitcoin linked to it". How do you verify that it is theirs and it is not shared with some other entity? There is no transparency. By design. It is like bearer bonds without copy protection.

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[BeepBoopBeep]

Isnt it strange a crypto based company doesnt just use blockchain tech to automate accounting auditing? I mean, isnt that the one of the benefits of amazing blockchain?

In case anyone wants to know

[rsilvergun]

Why this is a big deal, this is the company that is in charge of proving that Binance's financial reserves are actually there. The fact that they're backing off of crypto is assigned that Binance is getting ready to collapse and this company doesn't want to be on record saying that they're not.

Binance is one of the last big crypto exchanges and when they go there isn't going to be anyone left propping up the price of Bitcoin and other cryptocurrencies. A handful of true believers will try and the money laundering and ransomware will probably keep the price of Bitcoin around 10K for a while until the government gets around to cracking down on that. But this is very likely to be beginning of the end for this whole scheme

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[Bill, Shooter of Bul]

I don't know about Binance anymore than anyone knew about FTX before the infamous report showing that they were in trouble. I think that's likely the point, No one really knows what their financial status is. FTX also put out strong statements periodically saying they were in awesome tip top shape, and SBF being called JP Morgan.

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[DeadSeaTrolls]

What about Matt Damon's one, fire hosing countless billions on stadiums, celebrities, and assorted nonsense?

Mazars has not impressed me in the past.

[gweihir]

I saw some IT security audit-reports by them, very "checklisty", very much not "insighty". I did find stuff (I do internal audit as a service for IT security among other things) they overlooked. No surprise they were active in the crypto space. But at least they seem to have noticed something.

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[DeadSeaTrolls]

Up there with getting a JD Power award

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[Bourdain]

I know Mazars pretty well too - I wouldn't trust anything outside of their core assurance/audit/tax practices but that goes for pretty much any accounting firm - even the big 4 - the smartest people in those organizations usually leave after a few years at most for a better lifestyle for the same or better money

Accounting, especially in the US, is a bit silly compared with UK in terms of the respect of the profession and how it operates

At least Mazars is taking a breather in an area they know nothing about

SELL !!!

[Blackeneth]

Whenever an auditor resigns, sell anything you have invested immediately.

Bad things are coming -- in about 2 weeks, max.