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Binance's third-party auditor Mazars reports "excess reserves of 101%," what are the concerns? Kraken founder Jesse Powell speaks out again

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Audit firm Mazars has completed the BTC reserve audit for Binance exchange. According to the report, as of 23:59 UTC on 11/22, Binance holds 575,742.4228 BTC, which is 101% of the user assets.

Concerns from Various Sectors

Currently, concerns regarding reserve audits from various sectors include:

  • Assets other than BTC have not been audited

  • Exchanges have not committed to regular audits

  • Whether independent audits can be conducted on user liabilities

On-chain analyst Willy Woo questioned CZ, but CZ stated that conducting independent audits is a massive undertaking and emphasized that Binance has no outstanding loans to any institutions.

CoinDesk quoted Francine McKenna, a financial accounting lecturer at the University of Pennsylvania's Wharton School of Business, as saying:

This is not an official audit. They audited the list of addresses provided by Binance, without independently examining the balances of banks, custodians, or deposit institutions. This audit report is even less useful than those of Tether and USDC.

Francine McKenna also mentioned that in 2017, the auditing firm Friedman, which audited Tether, was fined $1.5 million by the SEC for multiple instances of improper professional conduct.

Note: Friedman is also the auditing firm for GBTC, and the auditing firm listed in Grayscale's November report is Marcum LLP, which has since acquired Friedman.

Interestingly, Mazars, the auditing firm hired by Binance, has also been involved in scandals. The UK Financial Reporting Council (FRC) pointed out earlier this year that Mazars' audits had deficiencies and did not meet relevant regulations and standards, resulting in a £250,000 fine.

Jesse Powell, the founder of Kraken, expressed his dissatisfaction with the media's extensive coverage of Binance's completion of reserve proof. He stated:

Dear media clowns, do you feel any obligation to assess the authenticity of audits and reserve proofs? Do we really have to go through this all over again? Here's a headline for you: "Media gets fooled again, too lazy to fact check."