Auditing firm Mazars suspends all work for cryptocurrency clients

The Paris-based company was hired in November by Binance to perform a proof-of-reserves check on its Bitcoin holdings

Higher interest rates and concerns about an economic downturn have roiled cryptocurrencies as investors flee risky assets. Reuters

Mazars Group, the accounting firm used by crypto giant Binance Holdings and other crypto exchanges for proof-of-reserves statements, has paused all work for cryptocurrency firms.

The Paris-based auditing firm said it had suspended work for cryptocurrency companies because of indications that markets have not been reassured by the “proof-of-reserves” reports it has published so far, Bloomberg reported on Saturday, citing a statement from the company.

The firm was also concerned about intense media scrutiny, the statement said.

Mazars, which was hired in November by Binance to perform a proof-of-reserves check on its Bitcoin holdings, found that the exchange's reserves on a single day in late November were over-collateralised, as per media reports.

Mazars later deleted the webpage containing a report published on December 7, on the check.

The latest development comes as the industry faces a crisis of confidence after popular crypto exchange FTX filed for bankruptcy last month.

FTX filed for bankruptcy protection in the US on November 11 in the highest-profile cryptocurrency exchange failure to date, after traders pulled $6 billion from the platform in three days.

Many crypto exchanges have seen revenue slump as trading activity fell off in recent months with crypto prices plunging.

Higher interest rates and worries about an economic downturn have roiled cryptocurrencies as investors flee risky assets.

Earlier this month, cryptocurrency exchange Kraken said it was laying off 30 per cent of its workforce amid the fallout from this year’s digital asset market meltdown.

“We’re reducing our global workforce by approximately 1,100 people, or 30 per cent, in order to adapt to current market conditions,” the company said.

Bitcoin, the world’s largest digital currency, plunged from a record high of about $68,000 last year to trade at $16,719.50 on Sunday.

Cryptocurrency trading platform Coinbase reported a $545 million net loss in the third quarter, from $406 million of net income in the same period last year.

The company’s revenue dropped 53.3 per cent to $576 million in the three-month period.

Global crypto adoption levelled off in the past year after growing consistently since mid-2019, according to a report by blockchain data platform Chainalysis.

However, it has remained well above its pre-bull market levels in 2019, the research found.

The Middle East and North Africa is the fastest-growing cryptocurrency market in the world, accounting for 9.2 per cent of global digital currency transactions from July 2021 to June 2022, the report said.

Individual investors in the Mena region received $566 billion in cryptocurrencies during the period, an annual increase of 48 per cent.

Turkey was the largest cryptocurrency market in the Mena region, with its citizens having received $192 billion. However, this represented slower yearly growth of 10.5 per cent, compared with other countries in the region, the report said.