The process of auditing cryptocurrency exchange reserves will have to wait. This is because the accounting firm Mazars, which even audited Binance’s reserves, announced that it has stopped its partnership with exchanges. With that, the company will no longer issue proof of reservations (PoR) reports to companies such as Binance, KuCoin and Crypto.com. “Mazars has indicated that it will temporarily pause its work with all of its crypto clients globally, which include Crypto.com, KuCoin and Binance. Unfortunately, this means that we will not be able to work with Mazars at this time,” a Binance spokesperson said in a note sent to Bloomberg News this Friday (16). In addition to ending the partnership, Mazars removed the “Mazars Veritas” section from its website, which presented the audits of the exchanges. Due to this, the Binance Proof of Reservations (PoR) report has been deleted. The page is currently offline. And Mazars wasn’t the only accounting firm to end its deal with cryptocurrency firms. Last Thursday (15), Armanino also announced that it will no longer audit exchange reserves. Neither company disclosed the reasons behind these decisions. However, it is possible that the pressure on crypto exchanges after the FTX collapse drove both Mazars and Armanino away.
Exchange reserve audit
Mazars had been working with exchanges to publish proof of reserves reports since the FTX collapse last month. These documents show holdings of platforms’ digital assets as a means of proving whether or not your reservations are guaranteed. Earlier this month, as reported by CriptoFácil, Mazars published a report on Binance’s Bitcoin (BTC) reserves. At the time, the audit concluded that the exchange’s BTC reserves were fully collateralized. This means that the exchange holds enough Bitcoins to cover the balance of all its users. To arrive at the result, Mazars analyzed proof of reserves, as well as Binance’s proof of liability. In view of this, the company estimated that the exchange’s Bitcoin reserves are 101% guaranteed. However, as stated above, the Binance report page no longer works. With the company out of the game, Binance said it will focus on other transparency measures like proof of Merkle Tree reservations, for example. It is a data structure that can be used to verify on-chain data. “We have reached out to several large companies, including the Big Four, who are currently unwilling to conduct a PoR for a private cryptocurrency company and are still looking for a company that will,” said the Binance spokesperson.
Kucoin report also ‘disappears’
Mazars also issued a reserves report for Kucoin, which entered into an agreement with the company in early December. In the report, the auditor stated that Kucoin’s BTC, ETH, USDT and USDC reserves were all overcollateralized. That is, the company has assets to cover its customers’ funds. However, this report is also no longer available. While exchanges claim these reports help improve transparency, critics say it’s not enough. That’s because the documents don’t provide details about a platform’s responsibilities.
