Binance continues with auditing and acquisitions following the collapse of rival exchange FTX, the contagion from which continues to spread.
With the collapse of FTX, other crypto exchanges have been making efforts at greater transparency. While many have offered cold wallet balances as proof of reserves, Binance has even provided the use of Merkle trees.
Now, Binance has gone one step even further, hiring global auditing firm Mazars to verify its token reserves. A spokesperson for the exchange explained that the third party financial verification served to enhance the proof of reserves.
“Mazars is reviewing all information that we have shared publicly to date on proof of reserves (BTC) and will also be verifying future updates and tokens,” a Mazars spokesperson said. “The first verification update for BTC will be completed this week.”
In addition to greater efforts at transparency, Binance continues to expand into more markets around the world. The exchange announced that it had acquired Japanese-registered crypto exchange service provider Sakura Exchange BitCoin (SEBC).
Since SEBC is regulated by the Japan Financial Services Agency (JFSA), the acquisition allows Binance to enter the market legitimately. Japan’s recent realignment towards crypto integration motivated Binance to re-enter the market after failing to do so four years ago.
FTX Fallout Hits Trading Platform
While Binance strives for greater transparency and market dominance, the effects from FTX’s collapse continue to spread. Crypto trading platform Auros Global has become the latest such firm to struggle in the wake of FTX’s failure. “Auros is experiencing a short-term liquidity issue as a result of the FTX insolvency,” decentralized finance underwriter M11 announced.
According to them, Auros missed a principal payment on a $3 million loan of 2,400 WETH from a credit pool on Maple Finance. While M11 clarified that this missed payment does not mean the loan is in default, it demonstrates that the industry continues to suffer from Sam Bankman-Fried’s dubious financial practices.
In spite of years of success with FTX, it seems Bankman-Fried had always maintained a cavalier approach to risk, compliance and accounting. Before founding the exchange, several of Bankman-Fried’s colleagues at Alameda Research resigned due to issues with his perceived negligence.
According to these former staffers, Bankman-Fried would frequently brush off concerns over risky gambles he would make on crypto assets. They also claimed that operating cash had often been used interchangeably with trading capital, with net balances often unclear due to poor record-keeping. Many of these same issues have been identified by FTX’s current staff managing the company’s bankruptcy.
U.S. Senators Join the Fray
As the contagion continues to spread and Bankman-Fried’s irresponsible actions come to light, U.S. Senators have started speaking out.
Senator Elizabeth Warren condemned FTX during a recent hearing of the Senate Banking Committee, which focused on several financial appointees.
Alternatively, she commended Martin Gruenberg, the acting chair of the Federal Deposit Insurance Corporation. Were it not for his efforts at keeping crypto distinct from financial markets, she said, the collapse of FTX could have had a much greater impact on the traditional banking system.
Meanwhile, Senator Sherrod Brown, the chairman of the Senate Banking Committee, recently outlined his vision for comprehensive cryptocurrency regulation. In a letter to U.S. Treasury Secretary Janet Yellen, he argued that all relevant financial agencies must have oversight.
Long perceived as a key legislator for cryptocurrencies, the Senate Banking Committee said in the letter that the collapse and fallout of FTX required lawmakers to begin undertaking such legislation.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.