FTX's Former Auditor Prager Metis Sued by SEC

Bankrupt crypto speech FTX's erstwhile auditing steadfast Prager Metis has been accused of violating U.S. auditor independency rules by the Securities and Exchange Commission, a Friday court filing shows.

The SEC alleges the steadfast helped its clients – including 62 entities registered with the regulator – to interruption national securities laws. It seeks an injunction against the auditor and wants it to wage fines and springiness up immoderate profits made from amerciable activity.

Prager Metis audited FTX's planetary arm and reported $1 cardinal successful revenues successful 2021, CoinDesk reported successful November, connected the aforesaid time that FTX filed for bankruptcy successful the U.S. – with a $7 cardinal shortfall connected its equilibrium sheet. The institution besides had plans to unfastened a determination successful the Metaverse. The SEC's complaint, however, isn't centered connected the auditor's ties to FTX but connected agreements the steadfast made with its galore clients.

According to Friday's filing with the U.S. District Court for the Southern District of Florida, Prager Metis violated auditor independency standards by entering into agreements that included indemnification provisions – wherever clients agreed to merchandise Prager from liabilities and costs from its services "attributable to immoderate knowing misrepresentations by management."

The regulator besides alleged the auditor was notified of these violations since astatine slightest January 2019.

“Auditor independency is captious to some protecting the integrity of fiscal reporting and promoting nationalist trust. As alleged successful our complaint, implicit a play of astir 3 years, Prager’s audits, reviews, and exams fell abbreviated of these cardinal principles. Our ailment is an important reminder that auditor independency is important to capitalist protection,” Eric I. Bustillo, manager of the SEC’s Miami determination bureau said successful a press statement.