Binance Says Crypto ‘Learning Curve’ Is Preventing Audits

A full audit of cryptocurrency giant Binance could be a long time coming.

That’s according to Leon Foong, head of the world’s largest crypto exchange’s Asia-Pacific operations. He told Bloomberg News that while the company wants to hire an auditor, big accountants are still getting a handle on the crypto sector.

“It’ll take a longer time,” Foong said in an interview published Wednesday (Feb. 8).

“It shows you the limitations of the more traditional industries because there is a learning curve. Number one, it’s not their core competence. And number two, obviously there’s a lot of scrutiny if they get it wrong.”

This isn’t the first time the company has made this argument. In a CNBC interview in December, Binance CEO Changpeng Zhao was asked if he planned to commission a large-scale audit of the company.

He deflected, PYMNTS noted, saying that many accounting firms don’t even know how to audit crypto exchanges.

“Despite this assertion, industry insiders were quick to point out that Coinbase regularly submits its financials for audit by big-four accounting firm Deloitte, while CoinShares, another public company, engages Grant Thornton for its annual financial reviews,” PYMNTS wrote.

Audits aside, there was already a lot of scrutiny around Binance and the crypto industry as a whole following last year’s collapse of the FTX exchange, a saga in which Binance played a crucial role.

When FTX’s troubles first came to light in November, Binance initially offered to rescue its rival from its liquidity crunch with an acquisition offer. However, the company called off that deal days later, after reportedly being “taken aback” by what it discovered while performing due diligence.

Since then, as PYMNTS has written, investors have looked for proof that Binance is “cut from a different cloth than FTX.”

The company has faced challenges in its attempts to restore public trust. In lieu of an audit, Binance in December released a “proof of reserves,” showing that the company had enough bitcoin in reserve to cover its liability.

However, Binance was criticized for this tactic, with industry experts saying it wasn’t enough. Among them was Paul Munter, chief accountant for the Securities and Exchange Commission, who said the commission was warning investors to be wary of proof of reserves.

“Investors should not place too much confidence in the mere fact a company says it’s got a proof of reserves from an audit firm,” he told the Wall Street Journal. Offering up such a report, Munter said, “is not enough information for an investor to assess whether the company has sufficient assets to cover its liabilities.”

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