According to Paul Munter of the US Securities and Exchange Commission: US regulators, acting as agency chief accountants, are monitoring proof of reserves (PORs) more closely. Munter explained to The Wall Street Journal (WSJ) on Dec.
SEC Officials Warn Investors Need to ‘Watch Out’ for Proof of Reserve Audits and Crypto Exchange Claims
POR) FTX Collapse Following recent. On Thursday, in a conversation with the WSJ, the SEC’s deputy chief accountant, Paul Munter, explained that investors shouldn’t have much faith in the POR’s audits and claims. . The SEC is concerned that investors “may be getting a false sense of security from company reports,” he detailed in the WSJ report.
“We warn investors to be very wary of some of the claims made by cryptocurrency companies,” explained Munter. “Investors should not place undue reliance on the mere fact that a company says it has certified its reserves from an audit firm,” the SEC accountant stressed. Munter continued:
[POR audit] does not provide sufficient information for investors to assess whether the company has sufficient assets to cover its liabilities .
Munter’s commentary follows his POR concept, which has gained momentum among cryptocurrency exchanges since the collapse of FTX. Companies like Okx, Binance, Crypto.com and Huobi have released his POR audits, some of which have been met with controversy. Additionally, on December 16, Bitcoin.com News reported after accounting firm Mazars Group revealed it would no longer offer audits of cryptocurrency exchanges. His POR audit of Binance, which Mazars completed, has also been removed from the web.
“We have a better understanding of what’s going on in the market,” Munter told his WSJ. “If we find a pattern of facts that we consider disturbing, we consider referral to law enforcement.”
Additionally, Mazars Group does not provide POR audits to cryptocurrency exchanges. A spokesman for audit firm BDO said it was considering what types of clients it would accept that week. We believe that the company is doing the right thing by being reluctant to provide auditing services to cryptocurrency companies. “The Big Four companies … correctly judged that the risk [of auditing a cryptocurrency company] was very high,” Johans told the WSJ.
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