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Seeking Alpha 2023-02-08 15:46:35

Binance signals full audit of crypto exchange won't happen for a while - report

A full audit of Binance's ( BNB-USD ) ( BUSD-USD ) balance sheet remains some way off, Bloomberg reported Wednesday, citing the cryptocurrency exchange's Asia-Pacific head Leon Foong in an interview. His remarks come as the collapse of crypto exchange FTX ( FTT-USD ) late last year spurred calls for increased transparency in the space. In December 2022, auditing firm Mazars published a proof-of-reserves report on Binance and subsequently halted such reporting for crypto clients given the lack of understanding by the public. Binance is also using tools such as the Merkle Tree Proof of Reserves, a Binance spokesperson told Seeking Alpha in an emailed statement, "because it provides our customers additional reassurance that their assets exist on the blockchain and are safely under the control of the exchange." "We will also continue to work to provide other technical solutions, such as zk-SNARKs, that will further demonstrate our healthy financial position," the spokesperson added. In the crypto industry, hiring an auditor for a firm's assets and liabilities is tough because of certain complications such as price volatility. It's a non-traditional space where big accountants aren't used to auditing. “It’ll take a longer time,” Foong told Bloomberg . “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.” In December 2022, the U.S. Securities and Exchange Commission reportedly increased its scrutiny of crypto firms' audited proof of reserves amid the fallout from FTX .

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