A senior official from the United States Securities and Exchange Commission has warned investors to be “very wary” about relying on a crypto company’s “proof-of-reserves.”
Earlier this month, John Reed Stark, former chief of the SEC of Internet Enforcement, raised a “red flag” on Twitter over Binance’s proof-of-reserve report via Twitter on Dec. 11.
He said that Binance’s proof-of-reserve report didn’t address the effectiveness of internal financial controls, nor does it express an opinion or assurance conclusion, nor does it vouch for the numbers.
The firm had worked with several prominent crypto exchanges including Binance, KuCoin, and Crypto.com.
Ben Sharon, co-founder of digital asset management firm Illumishare SRG previously told Cointelegraph on Nov. 19 that a proof-of-reserve audit is still a viable step to review the financial health of crypto exchanges, but it’s not enough by itself.
Source: Cointelegraph