The Securities and Exchange Commission is sending a warning to firms that audit cryptocurrency companies: “If we find fact patterns that we think are troublesome, we will consider a referral to the division of enforcement,” The Wall Street Journal reported Thursday, citing Paul Munter, acting chief accountant at the Wall Street watchdog, in an interview. The securities regulator is concerned specifically about crypto firms' proof of reserves, which allow centralized exchanges, through an independent audit conducted by a third party, to showcase their solvency as well as the value of their reserves. Those reports have gained tremendous popularity following last month's implosion of crypto exchange FTX ( FTT-USD ) that was partly triggered by its shortage in internal controls, thus added to the risk of inaccurate financial statements. Crypto exchange Crypto.com, for instance, indicated on November 11 that around 20% of its ~$2.82B in total assets were in meme coin Shiba Inu ( SHIB-USD ). French auditor Mazars, which recently verified Binance's PoR among other trading platforms, reportedly decided last week to suspend its proof-of-reserves reporting for crypto clients earlier this month due to a lack of confidence in such disclosures. All in all, “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,” Munter to The WSJ . The reports "lack information for an investor to assess whether the company has sufficient assets to cover its liabilities.” Earlier this month, (Dec. 8) SEC advised public firms to disclose exposure to crypto turmoil .
XRP Rich List: Are You in The Top 10%?
