Binance, the world's largest cryptocurrency exchange by trading volume, has yet to commit to a timetable for a full accounting of its assets and liabilities.
โIt will take longer,โ Leon Foong, head of Asia-Pacific at Binance, said Bloomberg. He said that while the exchange plans to hire an auditor to fully skim the company's balance sheet, the world's largest accounting firms are still learning about the crypto industry, which has delayed the process.
โIt shows the limitations of more traditional industries because there is a learning curve,โ he said. โNumber one, it's not your core competition. And number two, there's obviously a lot of scrutiny if they get it wrong."
Foong's claims about the relative inexperience of large accounting firms with cryptocurrencies may be exaggeratedalthough. coin basewhich is publicly traded and is the second largest cryptocurrency exchange in the world by trading volume, hires Deloitte each year to prepare your annual return. And Tezos, an open source blockchain, uses PricewaterhouseCoopers.
Binance's clearance of the audit question continues an extended conversation within the crypto industry about demonstrating "proof of reserves", or proof that an exchange actually owns the assets it claims to hold on behalf of its clients. Following the precipitous collapse of the now-bankrupt cryptocurrency exchange FTX, numerous companies have performed or said they would perform audits to assure clients of the security of their trading platforms.
In December 2022, Binance launched an accounting of your Bitcoin assets. Conducted by the South African branch of global accounting firm Mazars, the audit said Binance's Bitcoin reserves were overcollateralized, meaning the value of its assets exceeded its debt. However, critics were quick to dismiss the report as incomplete and said an accounting professor CoinDesk that it was "useless".
Shortly after the report was published, Mazars said that it would not conduct any further proof-of-reserve audits for cryptocurrency companies for the time being. quoting โconcerns regarding how the public understands these reports.โ
The Mazars episode was not the only instance where Binance's accounting practices came under scrutiny. In early January, the exchange admitted irregularities in its stablecoin, BUSD. And just over a week later, admitted it Fortune that mistakenly mixed collateral for some of its tokens within the same wallet that stores customer funds.
โAdditional transparency around assets in custody is now a market demand,โ a Binance spokesperson said. Fortune in a sentence. "We believe that transparency can be achieved in multiple ways and we continue to work with others in the ecosystem and industry to achieve this."
Update, February 8, 2022 at 11:32 am: A statement from Binance was included after a spokesperson returned a request for comment.
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