- Binance believes that a complete audit of its finances may take longer than anticipated.
- The exchange’s former auditor Mazars stopped catering to crypto clients in December 2022.
- The reputational risk from association with crypto clients led to several accounting firms exiting this industry.
A complete audit of Binance’s assets and liabilities may take longer than anticipated. The world’s largest crypto exchange has been looking for an accountant to cater to its balance sheet for some time now, but the exodus of traditional finance (TradFi) from the crypto space has left several exchanges without auditors.
According to a recent report, Binance’s Asia-Pacific chief Leon Foong revealed that major accounting firms are still familiarizing themselves with the crypto sector, which has led to a gap in standards for challenges like price volatility.
“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,” Foong stated, adding that a full audit will take a longer time.
Changpeng Zhao, the founder, and CEO of Binance, previously stated that several major auditors in the world, including some of the “Big Four” accounting firms like Deloitte and KPMG, did not know how to audit crypto firms.
Zhao’s comments came in December last year after Paris-based accounting giant Mazars Group stopped catering to crypto clients. Mazars was hired by Zhao’s firm to audit Binance’s proof of reserves. The controversial audit revealed that the Bitcoins held by the exchange were overcollateralized.
Adapting to crypto’s standards is not the only reason why exchanges like Binance are struggling to hire an auditor. In December 2022, American accounting firm Armanino followed Mazars steps and abandoned the crypto space in favor of TradFi clients. The reputational risk these accounting firms exposed themselves to was not worth the reward.