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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
#82Earlier 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
"Stop the shredding!"
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#83Earlier 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…
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Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#84Earlier quoted context omitted.
One clarification: 1. For a bank run on an actual bank, it is known that a bank doesn't keep all your assets on hand - they are loaned out, which is (largely) what allows you to earn interest. So it is known that if everyone tries to withdraw at the same time that there won't be enough money. 2. For an exchange/brokerage, your money/assets are explicitly NOT supposed to be lent out without your permission. So, in the…
If there’s a single case of an exchange using a customer’s assets to make bets isn’t that a fraud charge? Or with the unregulated nature of crypto is it not that explicit?
Dipping into customers funds for operating expenses or other uses (loans to associated parties, investment, leveraging) is a big no for an exchange, obviously, whether or not it is fraud is ultimately for a judge to determine but it sure looks like that to me.
The lure of those balances is invariably too great to resist.
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#85Earlier quoted context omitted.
>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.
They are in the top 10 in my country and in many others, and they have been cautioned, which is regulator speech for 'improve your act or we'll go after you'. That means that they are on thin ice with respect to any future mistakes (specifically in their crypto division) and that their reputation (for the whole company) is at risk. The effect is that they will go through their customer portfolio and decide which ones…
I may have misunderstood. The first paragraph of your comment seems reassuring (like it's just risk aversion at Mazars) but then:
> If this was a canary in the coalmine it just started wheezing strangely and it looks a little dizzy.
sounds like a reason to leave the mine (i.e. there's something really wrong and this is a warning sign).
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#86Even 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.
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#87Proof of reserves != proof of liabilities. Proof today != proof tomorrow.
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.
How does Kraken/proof of reserves ensure that in case of bankruptcy there are no creditors with higher privileges?
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#88Earlier 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.
EY was the Wirecard's auditor, and PwC did an ad-hoc audit of the same before everything fell apart.
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#89Even 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 now at least with Coinbase it is the investors funds at risk, not the customers funds. And that example shows how hard it is to run such a business profitably.
Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work
#90Earlier quoted context omitted.
If there’s a single case of an exchange using a customer’s assets to make bets isn’t that a fraud charge? Or with the unregulated nature of crypto is it not that explicit?
Dipping into customers funds for operating expenses or other uses (loans to associated parties, investment, leveraging) is a big no for an exchange, obviously, whether or not it is fraud is ultimately for a judge to determine but it sure looks like that to me. The lure of those balances is invariably too great to resist.
> The lure of those balances is invariably too great to resist.
I think the folks at JP, etrade, and all of the other regulated exchanges would object to that characterization.