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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

#21

Post by lobochrome »

seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

Except there was no audit, only an attestation.

Outflows are as good as they were for FTX - if there is no 100% coverage of customer deposits.

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

#22

Post by dash2 »

seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

I think the point was, it wasn't even an audit, and Mazars is worried that people will misconstrue it as them giving Binance a clean bill of health (and then hate Mazars if Binance comes crashing down).

Also, presumably Binance has reserves because it needs them. Also, wouldn't the same logic apply to FTX? But then it turned out they were playing with the customers' money.

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

#23

Post by dragonwriter »

janakalin wrote: post #5

FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.

> FTX was also audited by a top firm, Armanino!

This is misleading. FTX, either referring to the specific the company or the whole network of companies, did not. What was referred to as the “WRS Silo” in the bankruptcy proceedings, which includes FTX.US, did.

The “Dotcom Silo”, which includes FTX-the-specific-company, had an audit, too, but by Prager Metis not Armanino, which, in contrast to Armanino’s known status, the post-SBF CEO handling the FTX bankruptcy describes in the bankruptcy papers as a firm with which I am not familiar and whose website indicates that they are the “first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”

The other silos, including the Alameda Silo (which naturally includes Alameda Research) had no audited financials.

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

#24

Post by hef19898 »

xhkkffbf wrote: post #20
janakalin wrote: post #5

FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.

Exactly. And people act like this is a problem with cryptcurrency, but it's really a problem with people in corporations behaving badly.

Only that crypto is so unregulated that is hard to define what to audit against. And FTX wad never fully audited anyways, something which woupd be impossible with non-crypto equivalents of whatever FTX was beyond a major scam.

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

#25

Post by jacquesm »

seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

I don't know if you have ever worked with a large accounting firm but when they 'pause their activity' that means that they are not going to tie their name to yours, effectively that's as much as saying we will not go down with you. Alternative reading is that they found fraud but they don't want to be the ones to ring the bell on a customer.

Binance is an exchange that holds balances, and those balances are in their internal coin, which supposedly is backed by their reserves. But as you've been able to see in the FTX affair that isn't always true and that is exactly the bit that Mazars refuses to continue to work on. Let's assume they know more than you and I and take it as a sign.

Keep in mind that an internal stable coin ledger is just a bunch of numbers that need not necessarily be backed by anything at all.

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

#26

Post by epolanski »

jacquesm wrote: post #8
nayuki wrote: post #6

> “We are financially OK,” said Zhao Where have we heard this before? Oh yeah: FTX is fine. Assets are fine.

Interesting how the players change but the script is exactly the same and yet, people keep falling for it. I really don't get it. I once knew some people that were up to their necks in an MLM/pyramid scheme, it was like a cult, no matter how many examples you gave them of people ending up losing their shirts they would buy more of the crap and stuff it in every nook and cranny of their house being sure that they were…

You would be surprised at human greed.

Was it last week when there was an interview with several "investors", and pretty much all of them admitted they knew they were speculating in a highly volatile and unregulated market before they lost all their savings in FTX' crash?

They knew the risks, they tried anyway, some really needed that money.

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

#28

Post by jacquesm »

pifm_guy wrote: post #18
seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

Outflows are good business only if you are fully backed....

Precisely. If they end up dry then that's end of story for them and Mazars as their auditors may well end up in the spotlight and/or the crosshairs of those that wish to seek redress.

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

#29

Post by [deleted] »

jacquesm wrote: post #25
seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

I don't know if you have ever worked with a large accounting firm but when they 'pause their activity' that means that they are not going to tie their name to yours, effectively that's as much as saying we will not go down with you. Alternative reading is that they found fraud but they don't want to be the ones to ring the bell on a customer. Binance is an exchange that holds balances, and those balances are in their…

[deleted]

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

#30

Post by seydor »

dash2 wrote: post #22
seydor wrote: post #10

What a misleading title > However, the accounting firm said on Friday that 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”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…

I think the point was, it wasn't even an audit, and Mazars is worried that people will misconstrue it as them giving Binance a clean bill of health (and then hate Mazars if Binance comes crashing down). Also, presumably Binance has reserves because it needs them. Also, wouldn't the same logic apply to FTX? But then it turned out they were playing with the customers' money.

The title puts "halts proof of reserves work" next to "outflows hit $6B", which on quick reading implies that they halted the actual "audit" presumably because something went wrong , hence why i think it's misleading

And while the article makes it clear that they withheld their report for PR reasons, I'm sure most people here will assume that the "audit" went wrong

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