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Mazars, the accounting firm that issued a proof of reserves report released by cryptocurrency giant Binance last week, has removed the report from its website and is no longer offering the service to its crypto clients.
Binance, the world’s largest crypto exchange, tweeted a link to the report on Dec. 7 to reassure clients of their reserves following the collapse of competitor FTX last month.
Binance, the world’s largest crypto exchange, is struggling to find an auditing firm to produce a proof of reserves. (Jakub Porzycki/NurPhoto via Getty Images/Getty Images)
According to the Wall Street Journal, Mazars deleted the report from its website on Friday.
“Mazars has suspended its activities related to providing Proof of Reserves reports to companies in the cryptocurrency sector due to concerns about how those reports are understood by the public,” the accounting group said in an email Statement sent to FOX Business.
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A Binance spokesperson said Mazars “has indicated that they will be temporarily pausing their work with all of their crypto clients globally, including Crypto.com, KuCoin and Binance. Unfortunately, this means we are unable to work with Mazars at the moment.”
“Ultimately, our users want to know that their funds are safe and that our business is financially strong,” Binance’s statement continued. “To that end, Binance’s capital structure is debt-free, and over the past week Binance passed a stress test that should provide the community with extraordinary assurance that their funds are safe. Despite the large number of withdrawals from 12 net withdrawals over three days, we were able to execute them without any delay.”
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Binance said it has approached several major accounting firms, including the Big Four, to seek one willing to produce a reserve evidence report. The crypto exchange said the Big Four — which are Deloitte, Ernst & Young, KPMG, and Pricewaterhouse Coopers — are all “unprepared to conduct a PoR for a private crypto company at this time.”
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The crypto industry was rocked by FTX’s demise, leaving investors with great nervousness after a run on the bank showed the exchange — worth about $40 billion at the time — didn’t have enough reserves to handle withdrawals to pay. The company filed for bankruptcy last month, resulting in billions of dollars in losses for an estimated one million customers worldwide.
FTX founder Sam Bankman-Fried was arrested Monday on multiple charges related to his company’s collapse, prompting calls for stricter regulation of the crypto industry by jurisdictions worldwide — including a requirement for proof of reserves.
Changpeng Zhao, CEO of Binance, speaking at the Delta Summit, Malta’s official event dedicated to blockchain and digital innovation promoting cryptocurrencies, on October 4, 2018 in St. Julian’s, Malta. ( Portal/Darrin Zammit Lupi / Portal Photos)
Binance founder and CEO Changpeng “CZ” Zhao told CNBC’s Squawk Box this week that “the well-run crypto exchanges should keep users’ assets one-on-one.”
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“People can withdraw 100% of their wealth on Binance,” Zhao said. “We won’t have a problem any day.”