Popular Cryptocurrency exchange KuCoin has said that it will be working with the Mazars Group, a multinational audit, tax, and consultancy firm (MG).
Proof Of Reserves Report Coming Soon
In order to increase transparency and evaluate the exchange’s holdings of collateralized in-scope assets, MG will provide a factual findings report for evaluation by KuCoin’s current and potential clients. Additionally, customer liability and Proof of Reserves (PoR) are provided in the MG report.
KuCoin’s CEO Johnny Lyu offered his thoughts on this most recent development.
He said that the safety and security of users’ funds is their first priority at the People’s Exchange. The firm’s collaboration with Mazars is the next step in their mission to make assets more visible to users, demonstrating their dedication to openness and enhancing industry confidence.
Why Mazars?
He added that Mazars was the right partner to work with because of their established and high profile portfolio of work.
“KuCoin has been committed to providing users with safe, easy-to-use platforms and products since day one, while making continuous progress in user protection, transparency, and risk management. It is a great pleasure to engage with Mazars, a leading audit, tax and advisory firm, to provide users with a reliable, credible platform during a time of turbulence and to promote the development of the industry.”
KuCoin Partner and Digital Asset Lead, Wiehann Olivier, said that the FTX collapse thrust the industry into a place where alot of transparency is needed. He added that the Mazars group would help KuCoin and other crypto exchanges build trust in a turbulent industry.
As the struggle to establish trust continues, KuCoin is facing bigger problems.
KuCoin a Ticking Time bomb?
Following FTX’s bankruptcy, cryptocurrency observers on Twitter focused their attention on KuCoin, the fourth-largest exchange in the world by trading volume. The sophisticated options product “dual investment” from KuCoin, which allowed clients to earn interest rates as high as 300% for making cryptocurrency deposits, was criticized for being a possible time bomb.
KuCoin CEO Johnny Lyu defended the exchange’s offering in an interview with Fortune done in Mandarin through a translator, claiming that it differs from other reward products and that KuCoin provides sufficient cautions to its consumers.
According to Lyu, a platform like KuCoin only has a duty to inform its customers of any potential dangers, which it does by designating dual investment as “advanced” and offering a FAQ detailing how it operates at the bottom of the product page.
Liability Report Also On the Way
A proof of reserves release, according to many in the crypto sector, is insufficient without a liability accounting and an independent audit. Only that Mazars would offer more openness and reporting on whether customers’ “in-scope assets are collateralized” was mentioned in KuCoin’s release. It’s not apparent if this procedure counts as a complete third-party audit.
Lyu stated in the interview with Fortune that KuCoin would release a proof of liabilities, but he did not give a timeframe, stating that it would need “additional time” to finish the required accounting.
Sen. Ron Wyden (D-Ore.) wrote to KuCoin and other significant exchanges on November 29 to request details, including the companies’ balance sheets and their procedures in the case of a crisis like bankruptcy.
KuCoin is currently waiting for confirmation from its legal team that it has received the inquiry, according to Lyu, who spoke to Fortune. Lyu did not promise to provide the information, noting that KuCoin is incorporated in Seychelles, not the United States. Lyu stated that KuCoin is instead concentrating on the publication of its Merkle tree proof of reserves.
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