The bad news keeps coming as the crypto winter is starting to turn into an ice age. Reports are in that the consulting firm Mazars Group has decided to cut ties with all the crypto firms whose accounts it often audits. This created a ton of FUD online with twitter users trying to start a run on Binance while CEO CZ tries to calm the masses.
This issues in the crypto space right now is the poison of suspicion is continuing to spread in the crypto sphere. That poison is the overnight implosion of Sam Bankman-Fried's company FTX. No one wants to get caught in that situation so panic and fear are running rampant as we wait to see what will be left.
Tp put it into perspective FTXT valued at $32 billion in February, filed for Chapter 11 bankruptcy in a matter of days on Nov. 11. Moves like that will have the most battle tested trader thinking twice about the stability of space. SBF was just arrested, refused bail and there is a hearing on his extradition is set for Feb. 8, 2023. He denies having intended to defraud investors, but we will see what the courts say. To add a little context to the background on FTX and how it pertains to this story outside of the obvious. Is days before FTX filed for bankruptcy, Bankman-Fried claimed the company's assets were "fine." This lie now has serious consequences for the entire crypto sector. Other exchanges were quick to show audits or proof of reserves to help calm fearful investors.
Now the firm Mazars Group has just announced that it is cutting ties with crypto firms, and more particularly Binance, Crypto.com and Kucoin.com. This is a huge blow for the three companies and space because it brings into question what's really going on. Could Binance, Crypto.com or Kucoin.com become the next FTX?
Mazars said,
It paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.$6 Billion of Net Withdrawals in 3 days The company said its proof of reserves reports are performed in accordance with reporting standards relevant to an agreed upon procedures report. They do not constitute either an assurance or an audit opinion on subject matter. Instead they report limited findings based on the agreed procedures performed on the subject matter at a historical point in time.
source
The objective of theses proof of reserves audit is to show that the crypto firm has enough reserves to deal with a run on it from its clients and investors. The firm published an audit on Binance that was mocked on social media for the selective information it contained. This move reinforces the mistrust and suspicion surrounding the sector.
As previously stated this moved caused massive withdrawals from Binance, but they said they were able to fulfill them without breaking stride. The company didn't say whether withdrawals are still ongoing. I hate to admit it, but I did take some of my assets off of Binance. Looking back It's probably not warranted. If Binance collapse I think crypto will be dead or almost dead so what does it really matter at that point. We will have to wait and see how all this plays out. I hope we have a good outcome, but I'm preparing for the worst.
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