CZ, the CEO of BINANCE came under heat yesterday during an interview with CNBC Squawk Box regarding auditing in crypto.
When confronted by journalist Andrew Sorkin regarding why Binance hasn't been audited by any of the Big-4 auditing firms, CZ stated that these firms do not understand cryptocurrency accounting.
In another question about the money that they received when SBF bought CZ's FTX stake worth 2.1 billion in 2021 and whether they are prepared to hand back that money to creditors if they were asked to, he evaded answering.
Claw back claims have a look-back period of 90 days that allows a bankruptcy trustee to recover money from creditors. Bankruptcy trustees and liquidators can sue creditors for money that the debtor has paid them during the said time period before bankruptcy was filed. But, as the Madoff case showed, claw backs can stretch back years if the liquidators can prove that Binance knew about the FTX insolvency in 2021. These claims will be fought for years in court by lawyers of Binance and FTX.
Mazars, the French auditing firm that did the Proof of Reserves assessment/audit for Binance, Kucoin, and Cryptodotcom has suspended working with crypto clients. Furthermore, Mazars deleted its Binance Proof of Reserves assessment, with the link to the report disappearing from their website.
This is concerning for the whole ecosystem. Auditors are pulling out of crypto firms because they are not happy about the access to information that crypto exchanges are providing, and which are baring them from doing full audits. It is not just Mazars who pulled out. Armanino, the auditing firm of FTX, Gate.io, OKX, and Kraken has also shut down its crypto auditing operations. By now, it is evident that auditors don't want to put their name on these types of auditing reports for fear of reputation, legal, and financial damages they might be liable to.
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Originally posted on my Leofinance blog. Updated version only on Publish0x.
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