Mazars to pause all crypto exchange proof-of-reserves reports

Accounting firm Mazars is temporarily ceasing all work for its crypto exchange clients, including proof-of-reserves reports for the likes of Binance, KuCoin and Crypto.com. 

A spokesperson for Mazars’ client Binance confirmed the news in a statement, adding that, “unfortunately, this means that we will not be able to work with Mazars for the moment.” Mazars did not immediately respond to a request for comment.

Mazars has been working with crypto exchanges to publish proof-of-reserves reports since last month’s collapse of FTX. These reports show the platform’s crypto holdings as a means of proving whether their reserves are adequately collateralized. While exchanges say these reports help to improve transparency, critics say it is not enough as they do not provide details about a platform’s liabilities.

With Mazars temporarily out of the picture, Binance’s spokesperson said the exchange giant will focus on other transparency measures. The spokesperson identified tools like Merkle Tree proof of reserves as one of the measures being developed. Merkle Trees a data structures that can be used to verify on-chain data. Bybit, another crypto exchange, recently rolled out its Merkle Tree-based system that allows users to verify its reserve holdings.

Big Four 

Binance also highlighted the importance of having these proof-of-reserves reports verified by independent auditors. “We have reached out to multiple large firms, including the Big Four, who are currently unwilling to conduct a PoR for a private crypto company and we are still looking for a firm who will do so,” said the Binance spokesperson.

Indeed, Mazars is not the only accounting firm to pull out of working with crypto firms. Armanino, a long-time crypto accounting partner, announced an end to its crypto audit services on Thursday.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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