Senator Elizabeth Warren recently spoke out against “sham audits” of cryptocurrency exchanges. Her comments come as Silicon Valley Bank (SVB) declares bankruptcy.
Her words echo the sentiment of many crypto community members who have been watching the collapse of the FDIC-insured institution with growing concern. Senator Warren’s comments focused on the importance of rigorous and independent audits of crypto exchanges.
She noted that entities with a proven track record of integrity and accuracy should conduct these audits. She also noted that many current auditors need to provide a comprehensive understanding of the exchange’s operations.
U.S. Senators Demand PCAOB Take Over Auditing of Failed Cryptocurrency Initiatives
U.S. Senators Elizabeth Warren and Ron Wyden have requested the Public Company Accounting Oversight Board (PCAOB) to assume responsibility for auditors who are ineffective in evaluating failed cryptocurrency initiatives. The PCAOB, an organization monitoring the audits of public companies and issuers, recently affirmed that proof-of-reserves (POR) could not be considered equivalent to audits.
Also, it does not comply with PCAOB auditing standards, followed by most cryptocurrency exchanges to guarantee the availability of customers’ funds. Sen. Warren pressed for rigorous control.
She said, “Let’s be clear: consumers should not be the ones who bear the brunt when suspect crypto companies fail, and PCAOB should do more to ensure this.”
Crypto Enthusiasts Express Disagreement With Warren’s Statement
Crypto enthusiasts disagreed with her statement, citing SVB’s role in declining the USD Coin token’s value. This brought up the issue of the collapse of a non-crypto-related bank, and crypto Twitter was perturbed about Warren’s attitude towards it.
In his response to Sen. Warren, Ari Paul, the founder of blockchain investment firm Blocktower Capital, said, “they are forcing a lot of outstanding companies into insolvency. Don’t pretend this enlarging of your realm is helpful to anyone. It is only leading to losses for both retail and institutional depositors.”
Accordingly, Elon Musk, CEO of Tesla, shared a meme demonstrating the challenge for investors in deciding whether to place trust in conventional banks or crypto businesses for their financial investments. The investor advisory from the Public Company Accounting Oversight Board’s (PCAOB) Office of the Investor Advocate cautioned users not to rely solely on PoR reports to confirm the presence of funds on exchanges.
In other news, Circle’s chief strategy officer and global policy head stated that they were making moves to safeguard USDC from a “black swan failure” in the U.S. banking industry and called for the FDIC to formulate a rescue strategy.