FTX Collapse has hyped the need for transparency.
Exchanges are releasing Proof of Reserves to regain the lost trust.
SEC makes a statement about Proof of Reserves.
has shaken up the market. The group is filled with fear because users believed their money was in danger. Proof of reserves provided some relief to the people in the midst of tragedy. Now, though, this might also be in danger.
The Securities and Exchange Commission [SEC] of the United States has a love-hate relationship with the cryptocurrency sector. Investors were once more warned by the SEC regarding proof-of-reserves .
Paul Munter, the SEC's acting chief accountant, claimed in a recent interview that the Proof of Reserves reports frequently "lack" sufficient information on the company. Munter said, “We’re warning investors to be very wary of some of the claims that are being made by crypto companies. Investors should not place too much confidence in the mere fact a company says it’s got a proof-of-reserves from an audit firm.”
A string of exchanges was compelled to publish their proof-of-reserves report as a result of the FTX fiasco . The community was happy that interactions were transparent, as mentioned earlier. Munter recognised that there was an opportunity for inspection even though he did not totally reject proof-of-reserves auditing. He further added, “We are increasing our understanding of what’s going on in the marketplace. If we find fact patterns that we think are troublesome, we will consider a referral to the division of enforcement.”
Proof of Reserves Report
The auditing company Mazars recently suspended all of its dealings with cryptocurrency clients. This includes KuCoin, Binance, and Crypto.com. None of the previously curated reports could be seen on Mazars' website as soon as this news surfaced.
Armanino, an auditing company that had previously been connected to FTX, also said goodbye to the cryptocurrency world. Armanino was a participant in a class-action case involving FTX,
The Big Four accounting firms, Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers, reportedly "refused" to audit Binance, according to CNBC.
At this rate and with the SEC getting more involved, it would be difficult for crypto businesses to curate their proof-of-reserves report.
Read also: Ex-FTX CEO, Sam Bankman-Fried gets Officially Released on Bail
