Michael Burry is a well-known investor and hedge fund manager. He became known in particular since the book then film “The Big Short”. This one really became known for its role played upstream of the subprime crisis. Investor Michael Burry calls audits of cryptocurrency exchanges like Binance and FTX “meaningless”. He says the problem with auditing cryptocurrency exchanges, like Binance and FTX, is the same as when he started using a new type of credit default swap.
Burry’s tweet
As mentioned in the introduction, Michael Burry is best known for being the first investor to foresee and profit from the crisis of 2008. It was the subprime mortgage crisis in the United States. Which happened between 2007 and 2010. It is featured in “The Big Short”, a book by Michael Lewis about the mortgage crisis. The book was also the subject of a film starring Christian Bale.
Following the cessation of proof of reserves audits for cryptocurrency companies by accounting firm Mazars Group, Burry tweeted: “Here is the problem. In 2005, when I started using a new type of credit default swap, our auditors were learning on the job. It is not a good thing. The same goes for FTX, Binance, etc. Auditing is essentially meaningless. »
the tweet de Burry refers to a Bloomberg article. The latter explains that the accounting firm Mazars has suspended its work on cryptocurrency companies. The reason stems from concerns over intense media scrutiny and indications that markets have not been reassured by the proof-of-reserves reports released so far, including for Binance, Crypto.com and Kucoin. This news follows criticism from the CEO of rival cryptocurrency exchange Kraken, Jesse Powell. Indeed, the latter recently denounced Binance’s proof of reserves audited by Mazars. This week, more than $3 billion in funds were withdrawn from Binance.
Binance’s response
The executive was asked why Binance does not use one of the big four accounting firms. Among these firms, we find in particular the big fools, that is to say Deloitte, EY, KPMG and PricewaterhouseCoopers (PwC). This recourse would be useful in terms of account verification. Therefore, some consider that the cryptocurrency company was unable to provide files and data for the auditors to give their approval.
Binance’s CEO addressed concerns about his exchange in an interview with CNBC last Thursday. Changpeng Zhao simply claimed that most accounting firms don’t know how to audit cryptocurrency exchanges.
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