After the collapse of FTX, centralized exchanges started publishing their Proof of Reserve reports to recover the trust of the community. Prominent accounting firm, Mazars was overseeing the PoR audits for major cryptocurrency exchanges including Binance, Crypto.com, and KuCoin.
In mid-December, however, the firm abruptly decided to temporarily cut ties with its crypto clients. At that time, a Binance spokesperson affirmed that the exchange intended to provide additional transparency and was looking into the best way to reveal details in the coming months.
Before the ties were suspended, Binance did release a report based on a snapshot review by Mazars. However, that did not account for a full financial audit and was eventually taken down. However, Leon Foong, Binance’s Asia-Pacific Head recently told Bloomberg in an interview that the exchange is seeking to release an expanded PoR statement.
As far as an exhaustive audit of its books is concerned, it seems like the exchange will hold back its horses for some more time. The Bloomberg report highlighted that Binance’s full audit of its assets and liabilities “is some way off.”
Foong affirmed,
“It’ll take a longer time.”
The executive pointed out that the company intends to hire an auditor for its whole balance sheet. However, big accountants are still not familiar with the technicalities of the cryptocurrency sector. Because of that, Leon pointed out, an agreed set of standards for facets like price volatility is not in place. Elaborating on the same further, he said,
“It shows you the limitations of the more traditional industries because there is a learning curve. Number one, it’s not their core competence. And number two, obviously there’s a lot of scrutiny if they get it wrong.”
Also Read – Binance, Crypto.com, KuCoin auditor pauses work with Crypto Clients
Foong is on the same page as CZ
Around the time of the Mazars episode, Binance executive Changpeng Zhao revealed that the exchange was working with auditing firms. He, however, did not name them. After stressing on how many audit firms were “kind of scared” to work with crypto businesses, he added,
“They don’t know how to audit user assets, different blockchains.”
Towards the end of last year, a Binance spokesperson reportedly said that user assets “are all backed 1:1 and Binance’s capital structure is debt free.”
Also Read – Binance Reserves are Accounted For and Fully Backed: Report