Famous investor Michael Burry reportedly criticized the auditing that went on within the crypto industry. He cited the major cryptocurrency exchanges opting for proof-of-reserves (POR) audits, calling it meaningless. The comment of Scion Asset Management investment firm founder came in the wake of POR audits halting of Mazars Group.
Earlier, the prominent accounting firm Mazars Group reported to halt auditings of crypto clients. The firm had done work for many leading crypto exchange firms from Binance Holdings Ltd. to Crypto.com and many others.
Following the FTX abrupt bankruptcy filing, users and investors for skeptics of crypto firms and the other players started witnessing the after-effects. Crypto firms came up with the notion to seek the method that would bring the confidence within users after the collapse. Proof-of-reserves auditing was the idea that resulted after the efforts and Mazars Group was surfaced as a potential firm to get done with the task.
The company was reported to suspend work for its crypto clients given the indications that it is not bringing any fruitful results. According to the company, the markets did not seem reassured even after publishing proof-of-reserves reports. Moreover, the company also showcased concerns about the ‘intense media scrutiny’.
While calling out the French accounting firm’s halting the audits for crypto exchanges, Burry posted a Tweet. He noted that it was a problem. In 2005, the auditors were only learning on the job when he started using a new type of credit default swap. He cited that it’s not the good thing and it goes for the crypto exchanges from FTX to others. The audits of crypto exchanges are meaningless, he added.
Michael Burry is a prominent hedge fund manager and investor who got fame after successfully predicting the mortgage crisis during 2007-2008. Moreover, he ended up making profits amidst the significant market turbulence. The financial crisis was born out of the housing market and he bet against the same.
Later on, the instance was explained in the book titled The Big Short, written by Michael Lewis. The story revolves around Burry and the movie with the similar title adapted it which was released in 2015.
Source: https://www.thecoinrepublic.com/2022/12/19/investor-michael-burry-thinks-crypto-firms-auditing-are-meaningless/