Binance auditor withdraws from working with crypto company – The Guardian
Binance, the world’s largest cryptocurrency exchange, has revealed that the auditor Mazars has stopped working with it.
The exchange, which has been hit by $6bn of withdrawals this week, said in a statement that the French auditing firm had “temporarily” paused work with Binance.
Mazars said it had paused all proof-of-reserves work among cryptocurrency clients, including Binance. Proof-of-reserves checks entail verifying that an institution can cover its customers’ funds. Mazars’ relationship with Binance is limited to proof-of-reserves work.
Mazars added it was pausing such work due to concerns about “the way these reports are understood by the public.” Mazars went on state that such reports had limitations in terms of providing assurances. It said proof-of-reserves reports “do not constitute either an assurance or an audit opinion on subject matter. Instead they report limited findings based on the agreed procedures performed on the subject matter at a historical point in time.”
The move by Mazars follows the collapse last month of FTX, one of Binance’s rivals, and the arrest on Monday of FTX’s founder, Sam Bankman-Fried, who has been charged in the US over alleged fraud, money laundering and conspiracy.
Binance customers have been scrambling to pull funds from the exchange, and a spokesperson revealed it handed back $6bn in total over Monday, Tuesday and Wednesday this week.
The spokesperson said Binance had managed the withdrawals “without breaking stride”, although on Tuesday the exchange had pause to withdrawals of the stablecoin USDC, after running out of the asset in its reserves. But it says its efforts to stave off bank run are working.
What is a stablecoin?
A stablecoin, like the name suggests, is a type of cryptocurrency that is supposed to have a stable value, such as US$1 per token. How they achieve that varies: the largest, such as tether and USD Coin, are effectively banks. They hold large reserves in cash, liquid assets, and other investments, and simply use those reserves to maintain a stable price.
Others, known as “algorithmic stablecoins”, attempt to do the same thing but without any reserves. They have been criticised as effectively being backed by Ponzi schemes, since they require continuous inflows of cash …….