The Securities and Exchange Commission (SEC) of the United States will examine audit organizations who perform audits for cryptocurrency companies more closely.
The SEC voiced worry that investors would receive false comfort from auditing reports and take a chance on exposure to cryptocurrencies.The action was taken in response to many cryptocurrency exchanges’ proposals to publish proof of reserves in order to reassure clients that their money is secure and the company is solvent.
By closely scrutinizing banking and financial institutions who collaborate with cryptocurrency startups, the SEC is maintaining its anti-crypto stance. The SEC is currently paying close attention to how cryptocurrency companies present their audit firm reports.
Due to regulatory pressure from authorities, banks and auditing businesses are hesitant to cooperate with cryptocurrency enterprises. The French audit firm Mazars has previously suspended its services for cryptocurrency exchanges like Binance, Crypto.com, and other exchanges in response to increased scrutiny of audit firms. Even Binance’s proof of reserves report was taken off from the platform by the auditing company.
“We’re warning investors to be very wary of some of the claimsthat are being made by crypto companies,” SEC’s Acting Chief Accountant Paul Munter told the Wall Street Journal on December 22.
Gary Gensler, the chair of the SEC, responded to the agency’s fraud allegations against former Alameda CEO Caroline Ellison and co-founder of FTX Gary Wang by saying that until crypto firms abide by established securities regulations, investors are at risk. The SEC continues to make it a priority to employ all of its resources to bring the cryptocurrency business into compliance.
