Auditors working for crypto giant Binance say the company holds enough bitcoin as collateral.
The auditing firm Mazars released the results of its look at Binance’s bitcoin reserve as crypto companies work to reassure customers and investors about their collateral following the collapse of the FTX exchange.
“Our report is solely for the purposes of offering Binance’s customers and prospective customers additional transparency and reassurance that their In-Scope Assets are collateralized, exist on the blockchain(s), and are under the control of Binance,” Mazars said in its report.
At the time of its assessment, Mazars found that Binance controlled in-scope assets exceeding “100% of the total platform liabilities,” the firm said in an announcement.
As PYMNTS noted earlier this week, crypto companies such as Binance and Crypto.com have begun working with outside auditors to issue proof of asset reports following the downfall of FTX, which imploded following a liquidity crisis and a run on its assets.
But a report by the Wall Street Journal argues that proof of asset reports only provide limited insights into the inner working of these privately-held companies.
“Investors might assume that this attestation is similar to a full audit when in reality it is not complete and does not disclose the full assets or liabilities nor does it discuss any controls,” Deniz Appelbaum, assistant professor of accounting and finance at Montclair State University, told the newspaper.
We’ve also argued that crypto exchanges — which ask consumers and institutions to place digital holdings in lightly-regulated settings — have shown to be a hurdle in the mainstream acceptance of cryptocurrencies.
“FTX is only the latest example of the issues at hand, where following the money is no easy task, and where consumers have found out just how vulnerable they’ve been to losses only after the fact,” we wrote.
When crypto exchanges fail, users can lose some or all of the money held on that exchange. Although conventional wisdom argues that self-custody is a safer bet for storing crypto, it demands that one not lose private keys or else risk losing access to their cryptos (and the money tied to them) forever.