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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

#71

Post by cokeandpepsi »

xiphias2 wrote: post #63
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?

Cz said to CNBC that the big four can't audit a crypto exchange. Then the reporters told him that Coinbase is audited by Deloitte. He didn't really have an answer, it's quite awkward clip.

stinks arthur anderson isn't around anymore, problems like this is what they were made for

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

#72

Post by Animats »

"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 entities and nobody has the big picture. (Like FTX).

4) They have enough assets on the books to look solvent, but many of those assets are overvalued or internal transactions. (Like FTX).

OK, crypto people. Full GAPP audit or we all assume you're broke.

If you have assets in an un-audited exchange, get them out now.

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

#73

Post by flotzam »

belltaco wrote: post #4

>Both KuCoin and Crypto.com said they had provided customers with the ability to verify their own holdings individually online. How does this even work?

https://niccarter.info/proof-of-reserves/ has a lot of info in general and about specific exchanges

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

#74

Post by quags »

epolanski wrote: post #26
jacquesm wrote: post #8

Earlier quoted context omitted.

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.

I bet if they were re-interviewed the risks they believed were crypto going to zero not the entire exchange folding with crypto essentially holding up for other exchanges or your own wallet.

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

#75

Post by jacquesm »

danuker wrote: post #64
jacquesm wrote: post #59

Earlier quoted context omitted.

Unless those assets devalue or are not easily liquidated.

Exchanges are in the business of "liquifying". But, indeed, it can go wrong, with severe consequences.

Anything they hold a position in creates risk, the typical exchange business model is that they are fast enough and good enough that they can operate out of the excess through various arbitrage options but with extremely volatile assets the bottom can drop out pretty quickly and once you start borrowing and leveraging it can happen a lot faster still.

Essentially they are operating as banks sans regulatory oversight. It's a recipe for disaster.

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

#76

Post by throw_pm23 »

akudha wrote: post #62
epolanski wrote: post #26

Earlier quoted context omitted.

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.

It is greed for sure. But it is also the lack of legit opportunities to invest, unless one is an accredited investor. I found a handful of places I wanted to invest, but I can't, because I am not an accredited investor. I am left with stock market and crypto. It is super funny (sad?) that I can go to Vegas and blow up my life savings in a matter of hours. There are no rules to save me from that. But there are rules c…

This is a good insight -- not just for non-accredited, but for everyone. The persistent low-interest era meant lack of investment opportunities for a decade which explains much of the crypto boom and many other phenomena.

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

#77

Post by jacquesm »

cokeandpepsi wrote: post #71
xiphias2 wrote: post #63

Earlier quoted context omitted.

Cz said to CNBC that the big four can't audit a crypto exchange. Then the reporters told him that Coinbase is audited by Deloitte. He didn't really have an answer, it's quite awkward clip.

stinks arthur anderson isn't around anymore, problems like this is what they were made for

They are no longer around for a very good reason. And Mazars is likely well aware of that reason.

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

#78

Post by xlbuttplug »

danuker wrote: post #48
xlbuttplug wrote: post #41

Earlier quoted context omitted.

The proof of reserves can be done in such a way that each user can verify that their balance is backed: https://www.kraken.com/proof-of-reserves > Proof of reserves today != proof of reserves tomorrow. You should be able to detect large outflows/inflows from/to their wallets and demand an explanation.

Coffeezilla demanded explanations from Tether. None were offerred. https://www.youtube.com/watch?v=-whuXHSL1Pg

Providing a proof of reserves is about putting user/investor minds at ease. If you're not willing to go all the way, why bother doing it at all?

Though I guess post FTX, all exchanges are scrambling to avoid losing a large chunk of their userbase. Claiming to have a proof of reserves, even if it was done in a half-assed and non transparent way, is probably good enough for the non-scrutinous user.

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

#79

Post by jacquesm »

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…

Exactly, and one more: they may have been shuttling money around from account to account to look solvent but aren't.

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

#80

Post by Closi »

ProjectArcturis wrote: post #52
jacquesm wrote: post #34

Earlier quoted context omitted.

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 is not lower tier. I don't know much about European accounting firms. But the rest of your comment seems to contradict your initial claim -- i.e. they are not Big Four and they have had a recent scandal.

> the rest of your comment seems to contradict your initial claim -- i.e. they are not Big Four and they have had a recent scandal.

It doesn't contradict it IMO:

1) In terms of the criticism from the FRC (which I believe is the 'scandal' you are talking about) KPMG were also criticised by the FRC so also would fall foul of this.

2) Just because a company isn't one of the 'big four' doesn't mean that they are lower tier.

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