...not even a real audit, and the auditor was auditor for the Trump organisation, LOL ))
...the next downleg in crypto is not far off, and this one could cause a contagion effect! Binance's Alleged Crypto Audit Failed, Not Even Its Auditor Would Vouch For It
Binance says an audit shows proof of reserves of customer funds. But its auditor will not vouch for the reserves nor the methodology demanded by Binance.
Binance's Proof of Reserves Statement
When we say Proof of Reserves, we are specifically referring to those assets that we hold in custody for users. This means that we are showing evidence and proof that Binance has funds that cover all of our users assets 1:1, as well as some reserves.
When a user deposits one Bitcoin, Binance's reserves increase by at least one Bitcoin to ensure client funds are fully backed. It is important to note that this does not include Binance’s corporate holdings, which are kept on a completely separate ledger.
What this means in actual terms is that Binance holds all user assets 1:1 (as well as some reserves), we have zero debt in our capital structure and we have made sure that we have an emergency fund (SAFU fund) for extreme cases.
The above Proof of Reserves Claim is interesting. If you have assets 1:1 then you should not need an emergency fund for extreme cases.
Audit by Whom?
The pseudo audit was by Mazars, a mid-tier global accounting firm according to the Wall Street Journal.
Its U.S. arm Mazars USA previously worked for former President Donald Trump’s company. Earlier this year Mazars USA said it would withdraw from its work for Mr. Trump’s company and could no longer stand by financial statements it had previously prepared.
Binance didn’t specify which of Mazar’s offices would be doing the verification of the reserves. A Mazars spokesman declined comment. Mystery Finances
After the collapse of Crypto exchange FTX, Binance Is Trying to Calm Investors, but Its Finances Remain a Mystery.
Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.
The report didn’t show total assets or total liabilities. Rather, its scope was limited only to bitcoin assets and bitcoin liabilities. Binance said it would begin releasing information about other crypto tokens in the coming weeks.
“It’s important for us to show users that the coffers are not bare, like at FTX,” said Binance’s chief strategy officer, Patrick Hillmann.
In an interview, Binance’s Mr. Hillmann said the Mazars letter covered all the bitcoin assets and bitcoin liabilities for the company’s Binance.com exchange—although the Mazars letter itself didn’t say this.
During the interview, Mr. Hillmann also at times referred to the work performed by Mazars as an “audit.” Asked about the appropriateness of Binance’s use of the term “audit” in the news release and elsewhere, Mr. Hillmann said: “We’re talking about a review of our assets in custody.” He also said: “I would just say we’re parroting others’ descriptions of this as an independent audit.”
Other basic information about Binance is lacking. Mr. Hillmann said he couldn’t provide the name of Binance’s ultimate parent company because Binance over the past year and a half has been in the process of a broad corporate reorganization.
First Rule in Truth Telling
The first rule in telling the truth is "Don't lie".
The second rule in truth telling is to not sound like you are hiding something. This is especially important when overall trust is in the gutter anyway.
This was not an independent audit. Mazars did not describe it that way and the company would not certify the methodology it used. Heck, neither Mazars nor Binance disclosed the precise methodology.
Who was Hillmann parroting in describing the procedure as a audit? Sadly no one asked, but my bet is Hillman was parroting himself or someone else at Binance.
Nor would Binance disclose its parent company due to a 1.5 year reorganization. WTF?
))
