Michael Burry of “Big Short” calls the audit of crypto exchanges pointless

According to the financier, cryptocurrencies are a relatively new asset class, and auditors are still just figuring it out

19.12.2022 - 13:00

755

2 min

Hedge fund manager Michael Burry, who is known for being one of the first investors to foresee and profit from the collapse of the housing market in 2007, says the recent audit on Binance’s proof of reserves carries zero weight.

Following the high-profile implosion of FTX, centralized crypto exchanges have been scrambling to provide proof-of-reserves reports, which aim to confirm that a platform’s reserves match its clients’ assets.

The Big Short investor tells his 1.2 million Twitter followers that crypto is a relatively new asset class and that auditors are still learning the ropes.

“This is the problem. In 2005 when I started using a new kind of credit default swap, our auditors were learning on the job. That’s not a good thing. Same goes for FTX, Binance, etc. The audit is essentially meaningless.”

Burry’s comments come after news that Binance’s auditor, Mazars, decided to halt its services over concerns that market participants may not fully grasp the content of their reports.

Says Mazars,

“Mazars has paused its activity relating to the provision of ‘Proof of Reserves Reports’ for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.”

The company has also taken down its website dedicated to crypto audits.

The French auditing firm recently worked with Binance and found that the cryptocurrency exchange has sufficient digital assets to back its users’ Bitcoin (BTC).

This material is taken from the website dailyhodl.com.

Author: