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Breaking: US SEC Sets Eyes On Audit Firms Working With Crypto Companies

The SEC retains anti-crypto stance as it looks to increase scrutiny over crypto audit reports by auditing firms.
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Breaking: US SEC Sets Eyes On Audit Firms Working With Crypto Companies

The U.S. Securities and Exchange Commission (SEC) will increase scrutiny of audit firms working on audits for crypto companies. The SEC expressed concerns over investors getting false reassurance from auditing reports, risking exposure to cryptocurrencies.

The move comes as several crypto exchanges proposed to release proof of reserves to reassure customers that their funds are safe and the firm is financially healthy.

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SEC Heightened Scrutiny of Crypto Audit Reports

The SEC continues to hold its anti-crypto stance by increasing monitoring of banking and financial companies working with crypto companies. Now, the SEC is looking closely at how cryptocurrency companies are portraying their reports from audit firms.

Banks and auditing firms are reluctant to work with crypto companies due to regulatory pressure from regulators. Increased scrutiny over audit firms already saw France-based Mazars suspending services for crypto exchanges including Binance, Crypto.com, and other crypto exchanges. The auditing firm even removed Binance’s proof of reserves report from its platform.

“We’re warning investors to be very wary of some of the claims that are being made by crypto companies,” SEC’s Acting Chief Accountant Paul Munter told the Wall Street Journal on December 22.

In response to the agency’s fraud charges against former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang, SEC Chair Gary Gensler stated that investors are exposed to crypto risks until crypto companies comply with time-tested securities laws. It remains a priority of the SEC to use all available tools to bring the crypto industry into compliance.

The SEC is sending warnings to audit firms working on crypto audits. The regulator believes crypto exchanges are using proof of reserves reports from audit firms for their benefit. Also, it contains only limited financial details to assess whether the company has sufficient assets to cover its liabilities.

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Binance Addresses FUD

In response to increasing FUD, Binance on Thursday clarifies to the crypto community that the crypto exchange has been fully transparent about their working and safety.

Binance claims Mazars stopped working with all crypto companies as the crypto community didn’t consider the audit report valid. The Big Four accounting firms have not cooperated with private crypto companies, but had audited publicly listed crypto firms.

Also Read: Is This The Bottom For Bitcoin (BTC) Price Hitting $100K In 2023?

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Varinder Singh

Varinder has over 10 years of experience and is known as a seasoned leader for his involvement in the fintech sector. With over 5 years dedicated to blockchain, crypto, and Web3 developments, he has experienced two Bitcoin halving events making him key opinion leader in the space. At CoinGape Media, Varinder leads the editorial decisions, spearheading the news team to cover latest updates, markets trends and developments within the crypto industry. The company was recognized as Best Crypto Media Company 2024 for high impact and quality reporting. Being a Master of Technology degree holder, analytics thinker, technology enthusiast, Varinder has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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