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Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

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Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#161

Post by jrumbut »

jacquesm wrote: post #108
ta988 wrote: post #94

Earlier quoted context omitted.

So what does that tell about the exchanges that are managed in an unauditable way...

Essentially that they are most likely dipping in to support either their operations or other projects from the customer funds. That's not proof, but I would not at all be surprised if there isn't a single one of them that is clean.

There is also the possibility that they have too many assets due to participating in money laundering or tax evasion.

There really aren't a lot of good possibilities here, how did these exchanges get so large before anyone thought of audits?

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#162

Post by tsimionescu »

oh_my_goodness wrote: post #152
SV_BubbleTime wrote: post #138

Earlier quoted context omitted.

I suppose that makes the case that Bitcoin is a fiat currency. I have yet to see strong indicators of that.

Can you point to any indicator that it's anything else? EDIT: https://en.wikipedia.org/wiki/Fiat_money

Is there a central bank that can print or sell Bitcoin to stabilize its price? Is there a central bank that can set rates for BTC credits and deposits?

If not, in what way is BTC a fiat currency?

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#163

Post by superjan »

bushbaba wrote: post #159
Animats wrote: post #72

"Binance has said it holds more than $60bn in assets, enough to honour withdrawals. The company’s disclosures do not include its liabilities, which makes it difficult to ascertain its financial health." Possibilities: 1) They're insolvent. Liabilities exceed assets. (Like FTX.) 2) Their accounting is so screwed up they can't produce a balance sheet. (Like FTX). 3) They have a large number of interconnected corporate…

5) they print more tether when needed to handle withdrawals. But such massive tether prints can cause market issues.

Isn’t Tether controlled by bitfinex?

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#164

Post by jcampbell1 »

bufferoverflow wrote: post #133
godzillabrennus wrote: post #86

Even an audited exchange like Coinbase that is trying to do everything right is still self reporting loses like $430M in quarter 1 of 2022 just by operating their business correctly. Not your keys, not your crypto. Anyone storing their crypto on any exchange has this risk.

How do you lose so much money when your business it to charge fees? You'd have to do something really stupid to not make money.

Coinbase is like an empty casino with lots of employees, a solid vault, and no one at the table games. Binance is like a packed casino with few employees and about as transparent as mud.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#165

Post by jeffreyrogers »

godzillabrennus wrote: post #86

Even an audited exchange like Coinbase that is trying to do everything right is still self reporting loses like $430M in quarter 1 of 2022 just by operating their business correctly. Not your keys, not your crypto. Anyone storing their crypto on any exchange has this risk.

For many users of these exchanges their entire interest in crypto is speculation/trading, which requires them to store their crypto with an exchange so they can trade it because the costs associated with transferring to and from the exchange repeatedly would be prohibitive.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#166

Post by rurp »

oh_my_goodness wrote: post #152
SV_BubbleTime wrote: post #138

Earlier quoted context omitted.

I suppose that makes the case that Bitcoin is a fiat currency. I have yet to see strong indicators of that.

Can you point to any indicator that it's anything else? EDIT: https://en.wikipedia.org/wiki/Fiat_money

It's neither controlled by government fiat, nor is it commonly used to buy 99.99% of the things people use real currencies for.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#167

Post by rrdharan »

jeffreyrogers wrote: post #165
godzillabrennus wrote: post #86

Even an audited exchange like Coinbase that is trying to do everything right is still self reporting loses like $430M in quarter 1 of 2022 just by operating their business correctly. Not your keys, not your crypto. Anyone storing their crypto on any exchange has this risk.

For many users of these exchanges their entire interest in crypto is speculation/trading, which requires them to store their crypto with an exchange so they can trade it because the costs associated with transferring to and from the exchange repeatedly would be prohibitive.

Trading requires this, but pure long-$coin speculation does not.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#168

Post by gamblor956 »

jacquesm wrote: post #34
ProjectArcturis wrote: post #32

"To prepare a proof of reserves report, an auditor uses procedures agreed with the company but does not vouch for whether those procedures are appropriate. The auditor also does not give any assurance or opinion over the numbers in the report, as it would in a full financial audit." What does it say that a lower-tier accounting firm wouldn't even complete this garbage process?

Mazars is not lower tier. They're not in the big four but they are quite large and well respected, at least they were until they - and BDO, another large accounting firm - were flagged as insufficient in terms of oversight by the UK regulators. See: https://www.bloomberg.com/news/articles/2022-07-20/mazars-bd... So they're on thin ice and they will not risk going down with this particular ship.

Mazars and BDO are large yes, but they're not well respected. Over the past decade, both have had the ignominious distinction of having the worst PCAOB review scores of the top 100 accounting firms. It appears that their auditing practices in the U.K. aren't any better. (And both Mazars and BDO provided tax and auditing services to the Zuma and Ramaphosa administrations in South Africa, though this is because BDO's former S.A. member firm became Mazar's S.A. member firm.)

A large part of my early career in tax was fixing the mistakes made by tax advisors at these two firms.

Those who know, avoid BDO. (And Mazars too. They're actually worse.)

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#169

Post by dannylandau »

jeffreyrogers wrote: post #165
godzillabrennus wrote: post #86

Even an audited exchange like Coinbase that is trying to do everything right is still self reporting loses like $430M in quarter 1 of 2022 just by operating their business correctly. Not your keys, not your crypto. Anyone storing their crypto on any exchange has this risk.

For many users of these exchanges their entire interest in crypto is speculation/trading, which requires them to store their crypto with an exchange so they can trade it because the costs associated with transferring to and from the exchange repeatedly would be prohibitive.

You hit the nail on the head here. That's the main crux of the matter.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#170

Post by ethbr0 »

cj wrote: post #118
patio11 wrote: post #106

Earlier quoted context omitted.

FTX had more than 100 entities. You can find the org chart in the bankruptcy filing or here: https://qz.com/ftx-bankruptcy-filing-reveals-a-remarkably-co...

Source: Page 30 https://pacer-documents.s3.amazonaws.com/33/188450/042020648...

Oof. The preliminary corporate outline in Appendixes B of the filing is a lot.

I guess presumably you'd want to compartmentalize risk via corporate structures in as sprawling of a business as FTX was (especially if you were aware you had terrible internal controls), but it does beg the question of what nature of business each of these entities was engaged in.

I.e. if they conducting actual business and so their existence helped firewall other FTX entities, or if they simply existed on paper for accounting fraud

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