Binance and CEO Changpeng Zhao attempt to be transparent as Mazars released an AUP report indicating that the exchange’s Bitcoin Reserves are 101% collateralized.
The Crypto community raises concerns about why the centralized exchange chose to do an AUP engagement instead of a proper audit by recognized companies.
Recently, on December 7, Mazars released a proof-of-reserves and liabilities report. The independent audit firm took a snapshot of the reserves and did an analysis for Binance customers whose
“In-Scope Assets are collateralized, exist on the blockchain(s) and are under the control of Binance…” Mazars said in their report.
The report shows BTC Reserves are fully collateralized to 101% but it’s not really an audit. “This AUP engagement is not an assurance engagement,” the firm wrote, raising concerns among the community as to why the exchange didn’t release an official audit.
The agreed-upon-procedures report doesn’t assure users that the financial liabilities and reserves of the centralized trading platform are as mentioned.
Following the report release, the co-founder of Kraken, Jesse Powell, attacked the media for not looking into “the veracity of claims that are being made about audits and Proof of Reserves.”
FTX had also claimed to have done audits from some firms but no one ever doubted its financial liabilities until the exchange collectively collapsed due to the very reason. The trading firm had been in debt of billions of dollars and no user was aware of this for a long time.
The trust in centralized exchanges, including Binance, has decreased after the FTX crash because people now believe that these trading firms are unfairly using customer funds without their consent.
Will Binance hire a proper firm to do the audit or stick to the AUP report to advocate its transparency?