A senior official from the United States Securities and Exchange Commission has warned traders to be “very wary” about counting on a crypto firm’s “proof-of-reserves.”

“We’re warning investors to be very wary of some of the claims that are being made by crypto companies,” stated SEC’s performing chief accountant Paul Munter in a Dec. 22 interview with The Wall Street Journal.

A quantity of crypto corporations have commissioned “proof-of-reserves” audits for the reason that collapse of crypto trade FTX, aiming to quell considerations over their very own trade’s monetary soundness.

However, Munter stated the outcomes of these audits isn’t essentially an indicator that the corporate is in a great monetary place.

“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 additional added that these proof-of-reserve stories “lack” the adequate info for stakeholders to find out whether or not the corporate has sufficient property to fulfill its liabilities.

Munter additionally lately spoke on the Association of International Certified Professional Accountants Conference in Washington, D.C on Dec.12, the place he reportedly expressed frustration in regards to the consistently evolving construction of crypto corporations.

Munter famous to WSJ that if the SEC uncovers “troublesome” reality patterns, it might refer the matter to the division of enforcement for additional evaluation.

Related: Proof-of-reserves: Can reserve audits keep away from one other FTX-like second?

Earlier this month, John Reed Stark, former chief of the SEC of Internet Enforcement raised a “red flag” on Twitter over Binance’s proof-of-reserve report by way of Twitter on Dec. 11.

He stated that Binance’s proof of reserve report didn’t deal with the effectiveness of inside monetary controls, nor does it categorical an opinion or assurance conclusion nor does it vouch for the numbers.

It was revealed on Dec. 16 that French auditing agency Mazars Group, discontinued its part on its web site devoted to crypto audits.

The agency had labored with a number of outstanding crypto exchanges together with Binance, KuCoin and Crypto.com

Ben Sharon, co-founder of digital asset administration agency Illumishare SRG beforehand instructed Cointelegraph on Nov. 19 {that a} proof-of-reserve audit continues to be a viable step to evaluation the monetary well being of crypto exchanges, however it’s not sufficient by itself.

Investors have misplaced thousands and thousands over the previous twelve months with main crypto corporations going bankrupt together with Three Capital Arrows, Celsius and most lately cryptocurrency trade FTX.


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