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Mazars, an auditing firm, stops working on proof-of-reserves for Binance and others

The website that contained bitcoin exchanges’ proof-of-reserves work has been taken down by global auditing firm Mazars. The firm informed Bloomberg that it will no longer be collaborating with the cryptocurrency industry on proof-of-reserves reports.

In the past few weeks, Mazars has been mentioned in the crypto press on many occasions since it has begun publishing such reports for cryptocurrency exchanges. After the FTX collapse, the assumption is that exchanges will be able to reassure their customers. Using a hash, Mazars’ clients may verify that their crypto assets were accounted for thanks to the usage of Merkle trees. and Kucoin are among the companies that use the auditing firm’s services. Binance, though, was by far the most visible customer. Last week, Mazars issued a report stating that as of November 22nd, 23:59 UTC, Binance has sufficient Bitcoin and Bitcoin Cash to cover all customer balances on the exchange.

Many individuals were quick to point out that just a fraction of Binance’s operations were covered in the proof-of-reserves report for the exchange’s bitcoin reserves, which had been disclosed by Binance and Mazars.

It may be viewed as a positive development, but in the grand scheme of how Binance manages all crypto assets across all of its businesses, it doesn’t amount to much. The question of whether or not user assets are kept in a separate account from Binance’s own balance sheet is similarly murky.

While we believe that Binance is presently holding user accounts in segregated crypto wallets without any market exposure, we cannot be assured of this until Binance discloses all relevant information.

That Mazars has changed course is no evidence that the rumours are untrue. This only indicates that the auditing company does not see value in taking on the added risk posed by collaborating with crypto businesses to produce these reports. The public has paid close attention to these stories, putting Mazars’ credibility at risk should any of the reported trades fall through.

The time between the FTX collapse and the release of these auditing reports was maybe too short. While they were a positive development, further work is needed to demonstrate the security of user assets.