Elizabeth Warren Sounds Alarm Over 'Shady Audits' Threatening Financial System

U.S. Senators Elizabeth Warren (D-MA) and Ron Wyden (D-OR) have voiced their disappointment with the Public Company Accounting Oversight Board (PCAOB) over its failure to hold auditors accountable for “sham” crypto audits. 

The senators expressed their concerns about the role of “shady audits” in providing crypto firms with an illusion of financial stability.

In a letter addressed to PCAOB chair Erica Williams, Warren, and Wyden referred to the limited audits conducted by PCAOB-registered firms Prager Metis and Armanino for the bankrupt crypto exchange FTX before its collapse. 

“Given that the ongoing use of sham audits of crypto firms conducted by PCAOB-registered auditors mislead the public and threatens the integrity of that auditing system—and we now know, potentially the banking and financial systems—you have both the authority and responsibility to rein them in," Decrypt reported the letter as saying.

Warren and Wyden also criticized the validity of “proof-of-reserves” reports, an auditing practice for crypto firms that provides a report of the assets in reserve. 

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The senators pointed out that PoR reports do not follow established standards, are not overseen by the PCAOB, and do not prove that listed assets actually belong to customers.

In response to the lawmakers’ concerns, PCAOB chair Williams explained in a February letter that “unfortunately, the PCAOB confronts statutory limitations when it comes to controlling the audits of specific cryptocurrency companies.” 

She added that the organization is exploring ways to address concerns related to emerging technologies.

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