Cryptocurrencies are experiencing strong declines today, after the accounting firm Mazars, which recently created a report on the Bitcoin reserves of the Biannce exchange, announced that it was suspending cooperation with all cryptocurrency clients, including Binance and Crypto.com, citing concerns about public perception of evidence of reserves presented by exchanges.
In addition, the sentiment around risky assets has been greatly weakened by the even more hawkish stance of central banks, which has increased concerns about the impact of high interest rates on the weakening US and European economies. Wall Street indices are extending yesterday's losses, and the bulls are fearing 'three witches day', ie the expiration of $4 trillion worth of options on the 16th of the last month of the year. If the S&P 500 does not attempt to attack the resistance around 3900- 4000 pts, then declines could deepen at the end of the session which could spark additional volatility on the cryptocurrency market.
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Mazars' decision to discontinue cooperation with Binance, Crypto.com and KuCoin came after the company decided to publish a 'proof of reserve' report for several cryptocurrency exchanges. Information about the suspension of Mazars' cooperation with the cryptocurrency market was provided by the spokesperson of Binance, CNBC television;
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Clients and investors expect exchanges to provide evidence of their financial stability after FTX's bankruptcy. In a statement to CNBC, Mazars has stopped providing services to cryptocurrency exchanges due to public perception of these documents. The company's representatives added that the proof of reserves reports were "prepared in accordance with the standards for Agreed Upon Procedures reports: "They are neither assurances nor audit opinions on the subject of the audit. Instead, they report limited findings based on agreed-upon procedures carried out on a given entity at a certain time," the company said.
South Africa's Mazars branch published a five-page "proof of reserves'' for Binance on December 7, but the report was removed from the company's website. The report showed no liabilities for Binance's lending arm and was limited to reserves in BTC, which further caused a flurry of speculation about the exchange's problems. Binance CEO Changpeng Zhao has often said that Binance has no debt. On December 9, Crypto.com released proof of reserves audited by Mazars, certifying that customer assets were covered 1:1 ratio. The exchange added that customers can verify their balance on a dedicated website. A Crypto.com spokesperson added that the company "continues to engage with reputable audit firms in 2023 and beyond as they strive to increase transparency across the industry." KuCoin exchange said its Proof of Reserves report has already been provided by Mazars. "In the future, we are open to working with any leading and reputable audit firm to provide a third party verification report," the exchange said.
E&Y, PwC, Deloitte and KPMG, the so-called The Big Four - did not make any moves to end cooperation with their clients from the crypto sector. The Coinbase exchange remains a client of Deloitte. Neither of them responded to CNBC's request for comment. In an interview with "Squawk Box" on Thursday, the head of Binance, Chanpeng Zhao, said that the exchange cooperates with audit firms, although he did not mention them by name. According to Zhao, accounting firms still do not know how to conduct professional audits of the blockchain industry.
Bitcoin, D1 interval. Correlation between Bitcoin and US indices is still strong.Major cryptocurrency deepens declines in tandem with S&P 500 futures. Source: xStation5
BINANCECOIN fell over 6.0% today and broke below key support at $254.25, which managed to halt declines several times in the past. If current sentiment prevails, the downward move may accelerate towards support at $182.90, where lows from June 2022 are located. Source: xStation5
