SEC cautions accounting firms against accommodating non-compliant crypto clients

The U.S. Securities and Exchange Commission (SEC) issued a stern warning to accounting firms connected July 27, outlining the imaginable risks and liabilities of serving clients successful the rapidly evolving crypto industry.

Paul Munter, Chief Accountant to the SEC, said that galore crypto companies person wrongly stated that definite non-audit enactment is equivalent to an audit.

Munter wrote successful his statement:

“… Clients’ selling and terminology risks misleadingly suggesting that these alternative, non-audit arrangements are astatine parity with, oregon adjacent much “precise” than, a fiscal connection audit. Such suggestions are false.”

He explained that accounting firms could beryllium held liable for their ain statements and immoderate incorrect statements made by their clients.

Munter said determination are a “variety of facts and circumstances” nether which auditing firms could beryllium liable for violating antifraud provisions of securities regulation. He warned that specified violations could origin the accounting steadfast and its members to beryllium censured, reprimanded, oregon adjacent suspended from appearing oregon practicing earlier the SEC.

Munter added that Office of the Chief Accountant (OCA) unit judge that accounting firms should marque a “noisy withdrawal,” meaning breaking ties with dishonest crypto clients by making a nationalist connection oregon informing the SEC.

He besides suggested that auditing firms see risks earlier taking connected crypto clients, instrumentality precautions with existing clients that determination into cryptocurrency, and acceptable rules for however clients tin picture their narration with the auditor.

Crypto firms person occupation uncovering auditors

The informing is notable arsenic definite accounting firms broke ties with the crypto assemblage successful precocious 2022. Armanino and Mazars reportedly dropped crypto companies arsenic clients successful December. The Guardian besides reported that Binance was unable to unafraid audits from the “Big Four” accounting firms, though immoderate of those firms supply specified services.

Those work denials were seemingly motivated by the then-recent nonaccomplishment of FTX. It is unclear what developments, if any, prompted the SEC’s latest warning.

More caller reports suggest that the occupation remains. A Bloomberg survey from May suggested galore crypto firms are incapable to find large audit firms consenting to service them.

The station SEC cautions accounting firms against accommodating non-compliant crypto clients appeared archetypal connected CryptoSlate.