KuCoin is being dumped by both Mazars and the Central Bank of the Netherlands, De Nederlandsche Bank (DNB), the latter saying that the company is operating illegally.
The ranking of major crypto exchanges undergoes daily changes and with it, even more sudden are the updates about auditing in the industry.
In the wake of FTX’s collapse that led to losses for millions of users as well as the arrest of founder Sam Bankman-Fried among other repercussions, many cryptocurrency companies ran for cover by hiring auditing firms to verify and certify the collateral of companies.
KuCoin, is currently the third largest crypto exchange and is based in Seychelles, and because of its role and position it is among the companies that have rushed to hire Mazars (a French audit firm).
The transalpine audit had certified that KuCoin had over-collateralized Bitcoin, Ether, USDT and USDC.
The digital gold reserve for the crypto platform was 101% collateralized, stablecoin USDT 102%, USDC 101%, and Ether 100%.
The report had been provided on 26 November and the Proof of Reserve had been approved in full by Mazars.
Mazars leaves the KuCoin exchange
Things in the crypto world change fast and that is how the fear component came back into play and Mazars Group, has “temporarily” suspended relations with its crypto world assistants namely KuCoin, Crypto.com and Binance.
At the microphones of CNBC, Mazars had commented on the decision as follows:
“We have paused its activity related to entity reserve proof reports in the cryptocurrency industry due to concerns regarding how these reports are understood by the public. They are produced in accordance with standards [.. .] but do not constitute a warranty or audit opinion. Instead, they report limited results based on the procedures applied at a given time.”
Bad news typically never comes alone, and so the Central Bank of the Netherlands addressed KuCoin last Thursday.
According to De Nederlandsche Bank, KuCoin was operating illegally stating:
“Cryptocurrency company was illegally offering services and illegally offering custody wallets to customers.”
KuCoin is not sailing in good waters, and meanwhile Binance, also orphaned by Mazars specified that
“Mazars has indicated that the pause with clients from the cryptocurrency sector is temporary.”
On 7 December, the French auditing firm had published a five-page report on Proof of Reserve but it has since been removed from the exchange’s website.
The report only covered the collateral on Bitcoin and not the other credit assets, on this matter Changpeng Zhao pointed out that Binance has no debt whatsoever and that customers’ money is in a one-to-one protection ratio.
CZ to CNBC stated:
“Binance is working with some auditing firms and there are many who are scared to work in the crypto industry. There are companies that have done auditing for Ftx and they screwed up because they gave their approval, but they didn’t I know how they conducted the audits. The audits don’t reveal every problem. Many of these companies don’t know how to audit in the crypto industry.”
Source: https://en.cryptonomist.ch/2022/12/19/kucoin-loses-mazars-dnb/