adminBinance, the world’s largest digital-asset exchange, indicated a full audit of its assets and liabilities is some way off amid calls for more transparency following the collapse of rival FTX.
The company’s goal is to hire an auditor for the whole balance sheet but big accountants are still learning about the crypto sector, which lacks agreed standards for challenges like price volatility, Binance’s Asia-Pacific head Leon Foong said.
“It’ll take a longer time,” Foong said in an interview. “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.”
Binance sits at the heart of a digital-asset sector facing mounting pressure for greater openness after FTX went bankrupt with an $8 billion hole in its finances. While Binance argues crypto audits are challenging, others point to Nasdaq-listed Coinbase Global Inc.’s annual statements by Deloitte as evidence that they can be done by major accountants.
In December, Binance released a so-called proof-of-reserves report based on a snapshot review by accounting firm Mazars Group. The step was part of an effort to try and reassure about customer assets. The report didn’t amount to a full financial audit and Mazars later suspended work for crypto outfits.
A Binance spokesperson late last year said that user assets “are all backed 1:1 and Binance’s capital structure is debt free.” The comments came just after a spate of outflows that month amid a lack of confidence in the crypto sector.
The exchange in the past month conceded that it mistakenly kept collateral for some of the tokens it issues in the same wallet as exchange-customer funds. It also acknowledged past flaws in the management of its stablecoin’s reserves.
Binance is working on separating the collateral and customer funds. — Bloomberg.
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