Binance is the world’s biggest digital-asset exchange platform. Amid demands for more openness following the failure of rival FTX, it stated that a complete audit of its assets and liabilities is still some miles away.
Leon Foong, the head of Binance’s Asia-Pacific, said the company will hire an auditor for the entire balance sheet. However, efficient accountants are still in a developing mode in the crypto sector. The industry still lacks standard operational processes for price volatility and whatnot.
According to Foong, more conventional businesses have constraints since there is a steep learning curve. It isn’t their core competence, and there are a lot of reviews if they make a mistake.
FTX went bankrupt with an $8 billion blow to its finances. Now, Binance is in charge of a digital asset sector that is under pressure to be more open. Some people say that major accounting firms can do crypto audits, like Deloitte does for Coinbase Global Inc. Binance argues that it’s nearly impossible.
Let’s look back at the reserve report that alarmed quite a few
Binance published a proof-of-reserves analysis based on a Mazars Group snapshot review in December. This way, the company intended to provide reassurance about customer assets. Mazars later halted work for crypto businesses after the report didn’t result in a full financial audit.
Last year, a Binance spokesperson claimed that all user assets are backed 1:1, and that Binance’s capital structure has nothing close to debt. In December, a series of outflows occurred amid a lack of confidence in the crypto sector.
The exchange recently admitted that some tokens are stored in the same wallet as exchange customer funds. It likewise acknowledged the management of its stablecoin reserves in the past.
According to Foong’s Singapore interview, Binance is trying to separate the collateral and customer money asap. He went on to say that the exchange is also working on a bigger proof-of-reserves declaration.
