Auditors Turn Their Backs On Shitcoins
In today's edition of YIYL, (You Invest, You Lose) we take a look at how auditing firms are running for the hills and distancing themselves from the shitcoin space.
If your holding your funds in bitcoin on-chain there is probably no safer place to hold your money right now, apart from you being a complete retard and losing your seed phrase, no one going to get to your funds and they cannot be diluted by some premine, they're not going to be worth zero if one CEO or one company goes tits up.
And the bitcoin blockchain shows its proof of reserves every 10 minutes as a block is updated, what more do you want than that? Well, clearly most people want less, which is why they trust their funds to companies like Binance and FTX which don't have the greatest track record.
While FTX has called time on its operations and looks to recover, Binance is scrambling to bring confidence that they are not fractionally reserving their balance sheet and hoped to enlist the help of a few auditors.
Mazars quits crypto
After performing a proof-of-reserves assessment for crypto exchange Binance earlier in December, auditing firm Mazars announced it was withdrawing the assessment that its South African arm had put out, and its work with crypto firms in general. Mazars has done proof of reserves reports for Luno, Kucoin and Crypto.com but felt that the way these reports are marketed and understood by the general public are not what they are used for and should not be considered a full proof of reserve statement.
Armanino calls it quits on crypto
Armanino is ending its crypto audit practice and dropping clients, after being named in a class action law suit with FTX.US, they've since come out and stated that the reputational risk dealing with crypto is too high and look to fold their crypto division. Armanino also had Nexo, Mastercoin and Bitmex on their books.
BDO looks to leave Tether
Tether recently terminated their agreement with MHA Cayman in favour of BDO Italia affiliate this year and promised to release a full audit once they've moved over to the new auditors, but it's been months and we have seen nothing as yet.
Accounting firm BDO, which recently signed off on reserves reports for Tether has also said it is reconsidering its work for crypto companies.
Fractional reserve on steroids
If auditors who are getting paid their rate would rather turn away from money to avoid being associated with these companies, then you should wonder, what is going on and should I be holding on to their product?
I find it hilarious that in this so-called open, decentralised, and trustless industry, people are still willing to hand over their funds to shady businesses that cannot give you oversight into where their capital comes from, where their assets are, and the claims on those assets.
Not that proof of reserves would ensure that a company cannot go belly up, but it's such a lowball ask, it shouldn't be an issue.
Personally, I think that many of these exchanges are running a fractional reserve model and hoping they never get called out on their bullshit and enter a bank run. They feel that they've built up a customer base who love convenience or are too dumb to hold their own funds and will rather risk it with a centralized entity.
Sources:
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What do you good people of HIVE think?
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They are turning their backs on crypto while Michael Saylor buys 2,500 more Bitcoins.... personally I feel like he is trying to build a foundation under his feet with the shirt off his back while standing in quicksand at the moment but we will see.
While I think MS is a bit too aggressive this early on, I do respect his commitment to his thesis and his willingness to go down with it should the trade go against him in the short term. While a lot has been made about him doubling down on a losing trade, I think the bigger issue is MSTRs custody of it, I think they're using coinbase custody, personally wouldn't be trusting a third party like that all things considered
I still think 2023 is going to be a bear market of note, Powells not going to pivot in the first quater or if he does it will be late into the quater, so still plenty of bleeding to go
I think what he has to worry about as well is Microstrategy's core business drying up in general. It will be hard to make a buck in 2023.
And yeah, that is crazy he has all those coins on Coinbase custody. Their stock is down 90%. Who knows what happens to them if the stock goes down 99%.
I have to understand if everyone runs away because they are afraid of this market or if actually, besides Bitcoin, the rest is fluff. For example, for me HIVE can't be fluff, it may fail, but the idea of a blockchain dedicated to social media is an idea worth risking some money for me
Personally I think its all fluff, and I think you're conflating blockchain and tokens with a product, you don't need a blockchain or a token to run a distributed system, look at Nostr, its the same idea of sharing messaging without a central server, look at holepunch, its peer 2 peer data sharing without a token, You don't need a token or a blockchain
People are just emotionally tied to their investments because admitting you're wrong means admitting you got scammed and ego and pride wont allow it
This comment of yours is very interesting, but decentralizing information without a decentralized tokenomics is in my opinion an already lost action. Everything is based on money, to decentralize something I think it must have tokenomics
Lol how do you reconcile that idea when ALL tokenomics is governed by a central authority? They decide the issuance and who gets what, you just trade the float like the exit liquidity you're meant to be.
Decentralisation isn't achieved by slapping a token on access to a service run on central servers, decentralisation is achieved by you running your own instance as an option.
Also not a lot of things need to be decentralised apart from money
Thank you for this clarification and for this comparison. Your comments are always very interesting