Binance, one of the world’s largest cryptocurrency exchanges, has hired an audit firm that served Donald Trump to verify its crypto reserves. Mazars’ U.S. division is the longtime accounting firm for former U.S President Trump. The company has been Trump’s accountant for over two decades, and they have worked closely together during that time.
An inside look at Binance’s new proof-of-reserve audits
Cryptocurrency exchange Binance is working with accounting firm Mazars as part of its proof-of-reserve (PoR) audits triggered by the fall of FTX. One of the world’s largest cryptocurrency exchanges, has partnered with Mazars to conduct financial audits as part of its new proof-of-reserve requirements. The Wall Street Journal reported on the partnership on Nov. 30, 2020.
Mazars is a highly respected accounting firm that has worked for some of the biggest names in business, including former United States President Donald Trump’s company. Binance’s decision to partner with Mazars shows that it is committed to ensuring the safety and security of its users’ funds.
A Binance spokesperson reportedly said that the accounting firm is currently reviewing all of Binance’s publicly shared information on Bitcoin PoR and will be verifying any future updates or tokens. “This week, we will finish the first verification update for BTC,” the representative said.
Binance continue to find measures to gain customer’s trust
The announcement arrives as Binance is in the midst of a PoR audit that involves the transfer of substantial amounts of cryptocurrency. Binance CEO Changpeng “CZ” Zhao later announced that the November 28 transfer of 127,351 BTC, or roughly $2 billion, to an unidentified wallet was part of the exchange’s ongoing PoR process.
https://twitter.com/cz_binance/status/1597192848025464833
The action has trigger some concerns in the community, as previously, CZ argued that it’s bad news when exchanges have to move large amounts of crypto to prove their wallet address. However, Binance has taken this extra step to show its dedication to being a reliable and trustworthy exchange. This move will no doubt inspire confidence in users and help to solidify Binance’s position as a top exchange.
Furthermore, the crypto community is impressed and believes the measure is likely to set a precedent for other exchanges to follow suit and improve their own transparency practices. In an industry that is often riddled with scams and hacks, Binance’s proactive approach is a breath of fresh air.
Is Proof-of-Reserves enough to gain customer’s trust?
Many other exchanges, including OKX and KuCoin, have been quick to release their PoR reports in the wake of the FTX collapse to regain their customers’ trust. Meanwhile, some in the industry have an opinion that exchanges’ current PoR process is largely useless unless they also provide liabilities, which are difficult to forge.
The recent collapse of the FTX exchange has sent shockwaves throughout the cryptocurrency community. While many exchanges have been quick to release their Proof-of-Reserves (PoR) reports in an effort to maintain customer trust, some industry observers believe that the existing PoR process is largely useless. The main problem with the current PoR process is that it does not take into account liabilities, which are very hard to fake.
As a result, even if an exchange is able to show that it has the necessary funds to cover customer withdrawals, there is no guarantee that those funds will actually be available when needed. The only way to truly ensure customer safety is for exchanges to also provide full transparency of their liabilities. Until such reforms are made, the cryptocurrency community will continue to be at risk of losing billions of dollars to fraudulent exchanges.