In light of demands for transparency following the problems with competitor cryptocurrency exchange FTX, Binance’s Asia-Pacific head Leon Foong believes that a complete financial audit may still be some time off.
The exchange for digital assets, which made up 60% of trading volumes last year, wants to hire an auditor to examine all of its assets and liabilities, but many accounting firms are still getting a handle on the new industry, which includes navigating difficulties like price volatility in crypto assets.
Foong told that it will require more time. “Because there is a learning curve, it demonstrates the limitations of the more established businesses. First of all, it isn’t their area of expertise. Second, if they make a mistake, there will be a lot of attention.
After FTX lost more than $8 billion in user deposits last year, it has seemed extremely important for Binance to reassure clients that their assets are secure. A thorough audit could do just that.
Binance has never carried out a comprehensive financial audit. The accounting firm Mazars released a so-called proof-of-reserves report for the cryptocurrency exchange in December, but it has since stopped working with crypto clients because of “concerns over the way these reports are seen by the public.
Additionally, several experts have cautioned that proof-of-reserves reports are inadequate and potentially misleading because they only display balances at a single point in time.
According to a company spokesperson, Binance is currently using tools like the Merkle Tree Proof of Reserves, which is used to demonstrate that an exchange has the reserves it claims, in addition to offering other technological solutions like zk-SNARKs that “demonstrate [their] healthy financial position.”
According to a representative, the market now demands greater openness on assets under custody. Because we believe there are other ways to accomplish openness, we continue to work with others in the ecosystem and sector.
