Audits of Binance and other crypto exchanges are “essentially meaningless” since auditors don’t know how to deal with crypto, according to Michael Burry, the legendary investor who inspired the movie ‘The Big Short’.
According to Burry, this is the same problem as he was facing himself in 2005 when he started using “a new kind of credit default swap.” He said that auditors at the time were “learning on the job,” which is “not a good thing.”
“Same goes for FTX, Binance, etc. The audit is essentially meaningless,” Burry recently wrote on Twitter, while sharing a screenshot of the news that global auditor Mazars will stop working with crypto companies.
Reason to believe Burry
While some have been worried about the move by Mazars and others to quit their crypto work, there is reason to believe Burry’s point that auditors simply don’t understand crypto.
The notion aligns with what Binance CEO Changpeng Zhao (CZ) said during a CNBC interview last week, where he pointed out that major auditors simply are unfamiliar with crypto.
“Many audit firms are scared to work with crypto businesses,”
He added that the so-called ‘Big Four’ firms, a term that typically refers to PwC, Deloitte, EY and KPMG, “don’t even know how to audit crypto exchanges.”
None of the four firms have so far not commented on CZ’s remarks, but it is known that Deloitte prepares the annual audited statements for Coinbase.
A key difference between Coinbase and Binance is that the former is a publicly listed company fully regulated in the US, while Binance operates offshore and serves a much larger global audience.
Watch a segment from CZ’s interview on CNBC below:
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