Mazars, the auditing company operating in collaboration with the crypto exchanges like Binance to offer proof-of-reserves statements, has halted its operations for crypto users. This news has been disclosed by Binance in its emailed statement. A spokesperson from Binance stated that Mazars has declared a temporary halt on their activities with crypto consumers across the globe, taking into account Binance, KuCoin, and Crypto.com.
Mazars Pauses Its Activities for Crypto Users, Binance Spokesperson Says
Unluckily, this signifies that the respective crypto exchanges will be unable to operate in collaboration with Mazars, the spokesperson added. The accounting company carried out a proof-of-reserves evaluation for Binance formerly this month, discovering that the crypto exchange’s reserves in Bitcoin were overcollateralized. At present, the link to the report published by Mazars on its website is not functional anymore.
In that report, the auditor discovered that the reserves in USDC, USDT, ETH, and Bitcoin on KuCoin were overcollateralized. The respective report is additionally inaccessible. In the evaluation of the reserves possessed by Crypto.com, it was found that there was complete support of 1:1. These audits dealing with proof of reserves were started after the collapse of the crypto exchange FTX in the previous month.
Though the crypto exchanges claim that the reports assist them in enhancing transparency, opponents label them as insufficient. As per the critics, the particulars regarding the liabilities of an entity are also equally important to be disclosed for adequate transparency. As Mazars is not on the scene at the moment, the spokesperson revealed that the crypto exchange will pay attention to the rest of the transparency-related measures.
The spokesperson referred to the instruments such as the proof of reserves based on Merkle Tree which is going through its development phase currently. A Merkle Tree is considered a data structure to be utilized for the validation of on-chain data. Another crypto exchange called Bybit recently released its system based on Merkle Tree. The respective system permits the customers to validate their reserve holdings.
Big 4 Auditors Refuse to Offer PoR Audits for Binance
Apart from that, Binance brought to the front the significance of the reports covering proof of reserves after being validated by autonomous auditors. The exchange added that they have contacted several big companies, taking into account the prominent 4. Nevertheless, it added, they are presently not ready to perform a proof-of-reserves audit for an individual crypto firm.
