Accounting Firm Mazars Pauses Work With Binance And Other Crypto Clients
Paris-based Mazars was hired last month by major crypto exchange Binance to perform a so-called proof-of-reserves check on its bitcoin holdings.
Mazars, a French auditing firm, announced on Friday that it has halted all work for clients in the cryptocurrency industry. This announcement reflects a larger trend in the high-finance sector of the global economy as companies turn away from the troubled industry.
Binance, a major cryptocurrency exchange, hired Paris-based Mazars last month to carry out a “proof-of-reserves check” on its bitcoin holdings.
This month, the firm discovered that the exchange’s reserves were overcollateralized on a single day in late November. A report on the check that was published on December 7 was later removed from the website by Mazars.
“Mazars has paused its activity relating to the provision of Proof of Reserves Reports* for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public,” the company said.
Users of exchanges should be able to verify that their holdings are included in checks of blockchain data and that the reserves of the exchange match their assets through proof-of-reserves checks. They do not resemble a thorough financial audit.
The crypto market has lost nearly $2 trillion in value so far this year as a result of rising interest rates and intensifying concerns about an impending recession. Crucial business players like Celsius Network, Voyager Digital, and Three Arrows Capital have all been eliminated by the downturn.
However, the bigger blow came after the bigger cryptocurrency exchange FTX declared bankruptcy last month. Due to its quick decline, major exchanges’ user fund holding practices are now under intense regulatory scrutiny.
Earlier this week, Binance experienced a sharp increase in outflows, which its CEO Changpeng Zhao referred to as “business as usual.”
On Monday, the cryptocurrency exchange temporarily suspended withdrawals of a significant stablecoin, blaming delays in the conventional banking system.