US Democrats Warren, Wyden Want to Clamp Down on Crypto Audit

• Senators have asked regulators to keep a check on the registered audit firms for their work with crypto clients.
• The letter also asked the board to inspect defects in the auditing firms that recorded reports for FTX.
• Senators believe that misleading financial reports shake the confidence of the auditing industry.

Prominent US Democrats, Elizabeth Warren and Ron Wyden, on the Senate Finance Committee want the US audit regulator to clamp down on crypto accounting firms. Warren and Wyden accuse the US audit regulator of neglecting the work of accounting firms in “whitewashing ‘audit’ reports for crypto firms.”

Elizabeth Warren and Ron Wyden have requested the Public Company Accounting Oversight Board (PCAOB) to keep a check on the registered audit firms for their work with crypto clients. Both senators want PCAOB to control auditing companies for crypto firms that are private businesses or listed stocks.

The senators wrote in the letter:

When PCAOB-registered auditors perform sham audits—even for firms that may lay outside of the PCAOB’s jurisdiction—they tarnish the credibility of the PCAOB and undermine confidence in the PCAOB-registered auditors that investors and the public rely on when making investment decisions.

Senators believe that misleading financial reports shake the confidence of the auditing industry.

Acknowledging the letter, a PCAOB spokesperson said that the organization is working with the government on their shared goal of protecting investors.

The letter also asked the board to inspect defects in the auditing firms that recorded reports for FTX, the collapsed crypto firm. Senators have also asked if the audit reports have in any way violated any of the board’s rules. Warren and Wyden have asked the board what steps the regulator is taking to protect investors if proof-of-reserve examinations are disguised as audits.