Mazars has found itself in the headlines again this year after confirming it’s pausing work for crypto clients, including Crypto.com, KuCoin, and Binance, the world’s largest crypto exchange.
The news rocking the cryptocurrency world comes after the accounting firm in February backed away from another high-profile client — former President Donald Trump.
On Friday, Mazars told Yahoo Finance that it “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.”
Here’s what else to know about the accounting firm.
Exterior view of the tower housing the headquarters of Mazars, an audit and consulting firm located in the Paris-La Défense business district
What is Mazars?
Mazars is an international professional service firm that provides various financial services, including audit (49%), tax (16%), and outsourcing (16%), according to the firm’s 2020/2021 transparency report.
It operates in 90 countries but the majority of its offices and professionals are located in the European region. Mazars has 12 offices in the U.S., including in California, New York, Texas, and Florida.
In 2021, Mazars reported a fee income of $2.22 billion ( €2.1 billion).
What services did Mazars provide to crypto firms?
Mazars issued proof-of-reserve reports (PoR) for cryptocurrency exchange clients. The purpose of PoR reports is to verify that there are enough assets held by exchanges to back customer balances.
“It’s something that has been mentioned more and more since the FTX collapse,” said Romain Dillet, senior writer at TechCrunch. “Basically it’s like saying, ‘here’s what I have in my wallet and here’s what my customers hold on my exchange.’”
Ultimately, the exchanges wanted to provide customers with assurance.
“If everybody tries to withdraw everything at the same time, exchanges with reserves that are higher than customer deposits will be able to process all withdrawal requests,” Dillet said.
For instance, Binance explained its PoR system after the FTX fallout on its site and showed a 101% Bitcoin reserve ratio. Crypto.com also posted its Mazars PoR report on its website with an option to verify customer funds.
However, the Mazars PoR report specifically noted that these are not financial audit engagements and the firm does not express an opinion or assurance conclusion.
The Mazars report on Binance’s BTC reserve is no longer available on the firm’s website. Mazars removed all proof-of-reserve reports for cryptocurrency exchanges, according to TechCrunch, and Mazars currently does not list “cryptocurrency” or “blockchain technology” as industries it serves on its website.
