SEC Targets Prager Metis Over FTX Audit Failings: What This Means For Crypto Oversight

Zinger Key Points
  • Prager Metis accused of overlooking material misstatements in FTX's financial records.
  • SEC seeks injunction, penalties, and preventive measures against Prager Metis.

The U.S. Securities and Exchange Commission (SEC) has taken legal action against Prager Metis, the erstwhile auditor of the cryptocurrency exchange FTX FTT/USD accusing him of professional misconduct and non-compliance with the standards set by the Public Company Accounting Oversight Board (PCAOB) during its audit of FTX's financial statements for the fiscal years 2021 and 2022.

This development comes just weeks ahead of Benzinga's Future of Digital Assets conference scheduled for Nov. 14. The conference, which aims to shed light on the evolving landscape of digital assets, will likely address the increasing scrutiny and regulatory challenges faced by entities operating within the crypto space.

According to the SEC's complaint, Metis lacked the requisite professional skepticism and did not gather adequate audit evidence.

Such oversights led to the firm's failure to spot and rectify material misstatements in FTX's financial records.

The SEC further claims that the auditor neither sufficiently gauged the risks of material misstatement arising from potential fraud nor designed apt responses to these risks.

Also Read: EXCLUSIVE: CBDCs Epitomize Anti-Crypto Movement But There's A Catch, Elusiv Founder Says

The regulatory body also emphasized Metis' shortcomings in evaluating the validity of significant assumptions and data that FTX employed in its fair value measurements.

Furthermore, the auditor is alleged to have not procured enough evidence to back its opinion on the robustness of FTX's internal controls over financial reporting.

The commission is seeking a permanent injunction, civil penalties, and an order directing Metis to adopt measures to avert future infringements.

Read Next: How Matter Labs' ZK Stack Helps Celo's Layer 2 Migration

Meet and engage with transformative Digital Asset and Crypto business leaders and investors at Benzinga's exclusive event - Future of Digital Assets. Tickets are flying - get yours!

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: CryptocurrencyNewsSECMarketsCryptocurrency ExchangeDigital AssetsFair value measurementsFTXPrager Metis
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!