As the wake from the FTX fallout continues reverberating throughout crypto, Mazars Group has announced they are suspending all crypto work. Cutting ties with Binance, KuCoin and Crypto.com. You might recall the recent "audit" on Binance was performed by Mazars, but there has been blowback over it being a sham audit as the scope was controlled at the request of Binance.
In a brief statement, Binance said:
Mazars has indicated that they will temporarily pause their work with all of their crypto clients globally, which include Crypto.com, KuCoin, and Binance.
The timing of Mazar's ceasing crypto auditing work comes at a time when exchanges scramble to prove they are solvent, the biggest of them all, Binance more so than others.
In their statement to CNBC, Mazars Group said it had:
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.
This situation could be a case of Mazars Group protecting themselves from being associated with further fallout in crypto. If an exchange they vouched for went under, even if legally they wouldn't be blamed, the public perception would be terrible and damaging to their business.
The Binance situation is most likely the catalyst for the suspension. The proof of reserve audit for Binance only accounted for Bitcoin but did not audit liabilities for its lending arm. And what makes people suspicious is that CZ has repeatedly gone on record saying it has no debt.
One of the problems in crypto is there are very few accounting firms that are experienced enough to audit crypto businesses, especially operating at a scale Binance, FTX and Crypto.com are. Inevitably, these audits are only as good as the business providing the information is. FTX was audited, but it's clear the audit did nothing to sound the alarm on its financial peril.