Mazars Group, an international audit, tax and advisory firm has suspended all proof-of-reserve work for crypto clients. Consequently, this comes at a time when some of their biggest clients like Binance and Crypto.com are facing a massive threat. As to why, their reasoning is beyond condescending and as to why now, their timing is immaculately idiotic. So, before we go further into details and stuff, here’s why they stopped working with crypto clients. In short, they are “concerned” that the public may not fully understand the reports they create. Just wow! Is it not your job as an auditor to create a report that they public easily understands? Are the investors not smart enough to understand Mazars Group reports but are constantly encouraged to invest in their clients? Subsequently, the clients are now pulling out from centralized platforms like Binance. Speaking of Binance, the withdrawals still continue and at the moment they have had over $6 billion.
In the meantime, the Mazars kerfuffle has already reversed the timidly bullish trend in the past week. The decision to leave crypto has spread fear in the market and bumped up the withdrawals across the board. And you know what happens when a sudden wave of withdrawals hit sketchy exchanges right?
Mazars Group FUD
As part of a report, Binance hired the French auditing firm Mazars group last month. This was an attempt from Binance to reassure customers about their reserves following rumors of insufficient reserves. However, Mazars has now politely left the crypto sector citing various complications in making a report.
Basically, an auditing firm would conduct proof-of-reserve checks. These audits would then confirm that the exchange’s reserve matched the clients’ assets. As it turns out, a massive exchange platform like Binance is pretty much impossible to audit.
“Mazars has paused its activity relating to the provision of ‘Proof of Reserves Reports’ for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.” Stated the auditor.
However, they threw a curveball at Binance before pausing their services. According to the firm, Binance had overcollateralized their assets. This is something that Kraken CEO had pointed out before.
Naturally, the market did not respond well to this news as it resulted hundreds of millions in liquidations. According to Coinglass, the 24-H total in liquidations exceeds $236 million. At the time of writing this article, BTC is trading at $16,729. Standing tall on top of the liquidations, Bitcoin, Ethereum, Dogecoin, BNB and Litecoin are the unlucky coins.
As it seems, Binance and crypto.com are about to face a continuous wave of heavy withdrawals. A few days ago, Changpeng Zhao, the CEO of Binance called the withdrawals a “stress test” that proves on how good they can handle pressure. At this point, all we can do is hope that these platforms do not shatter under the stress test. In such case, the crypto winter may very well turn into an ice age of epic proportion.