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It's a pity. Proper audits would be a boon for honest crypto exchanges and it would be an opportunity for accountants to show they can actually add value after

It's a pity. Proper audits would be a boon for honest crypto exchanges and it would be an opportunity for accountants to show they can actually add value after all the scandals of the last 30 years...

coffeebeqn 4y ago
The crypto companies don’t allow real audits. They just do “attestations” where the company can arrange things beforehand to look the way they want and doesn’t allow the accountant to dig behind the presented numbers
- LatteLazy 4y ago
  As soon as one does, others will have to follow. And right now, accounting companies don't do real audits either (hence Enron and WorldCom and dozens of other examples). This is an opportunity for both of them to up their games.
quickthrowman 4y ago
> honest crypto exchanges I am reminded of Diogenes walking the streets of Corinth during the day with a lantern, looking for an honest man. The only one I would expect to be somewhat honest is coinbase, on account of the mandatory SEC filings and actual audits (vs attestations) but Enron, MCI, Tyco, and many other companies had the same oversight, so I’m still skeptical about coinbase being honest.
ceejayoz 4y ago
> Proper audits would be a boon for honest crypto exchanges... Correct! Ask yourself if "audits are impossible" is the likely answer to their rarity.
- jmull 4y ago
  Exactly. There's no such thing as a proper audit for crypto. Perhaps it could be invented, but no one has. I doubt the will to do it exists, since that would seem to be against the interests of all the big crypto players.
  - ceejayoz 4y ago
    > There's no such thing as a proper audit for crypto. No, this is absolutely the wrong take. Crypto isn't special. It can be audited, and nothing has to be invented. Coinbase has audit reports.
  - deleted 4y ago
    [deleted]
  - mschuster91 4y ago
    What? In fact, crypto is the easiest thing to audit - require the person that claims to own a wallet to sign a challenge you provide with the public key, and check if the signature matches with your challenge and the public key of the wallet and the wallet's balance from the public blockchain matches the claim of the auditee. And you can completely automate this without having to involve a third party like a bank.
    - ceejayoz 4y ago
      The likely challenge for the shadier exchanges it the “ok, but what have you used these coins you demonstrably possess as collateral for?” Having $10B in crypto is easy to audit. Finding out $20B is owed is where it gets exciting, FTX-style.
      - xg15 4y ago
        Not to mention, the risks tied to the coins itself. FTX was also fully backed, on paper. The problem was just that their reserves were in their own fantasy money, which lost all of its value the moment FTX got into trouble. (And how the real dollars that people had deposited somehow turned into fantasy money is the magic trick that brought SBF free lodging in the Bahamian jail) So an audit wouldn't just have to prove the assets are there on some chain, it would also have to verify the chain itself is actually suitable as a reserve.
    - blitzar 4y ago
      > require the person that claims to own a wallet to sign a challenge you provide with the public key That takes care of the assets ... now the liabilities
xg15 4y ago
Well, no one is stopping them...

coffeebeqn 4y ago

The crypto companies don’t allow real audits. They just do “attestations” where the company can arrange things beforehand to look the way they want and doesn’t allow the accountant to dig behind the presented numbers

LatteLazy 4y ago
As soon as one does, others will have to follow. And right now, accounting companies don't do real audits either (hence Enron and WorldCom and dozens of other examples). This is an opportunity for both of them to up their games.

quickthrowman 4y ago

> honest crypto exchanges I am reminded of Diogenes walking the streets of Corinth during the day with a lantern, looking for an honest man. The only one I would expect to be somewhat honest is coinbase, on account of the mandatory SEC filings and actual audits (vs attestations) but Enron, MCI, Tyco, and many other companies had the same oversight, so I’m still skeptical about coinbase being honest.

ceejayoz 4y ago

> Proper audits would be a boon for honest crypto exchanges... Correct! Ask yourself if "audits are impossible" is the likely answer to their rarity.

jmull 4y ago
Exactly. There's no such thing as a proper audit for crypto. Perhaps it could be invented, but no one has. I doubt the will to do it exists, since that would seem to be against the interests of all the big crypto players.
- ceejayoz 4y ago
  > There's no such thing as a proper audit for crypto. No, this is absolutely the wrong take. Crypto isn't special. It can be audited, and nothing has to be invented. Coinbase has audit reports.
- deleted 4y ago
  [deleted]
- mschuster91 4y ago
  What? In fact, crypto is the easiest thing to audit - require the person that claims to own a wallet to sign a challenge you provide with the public key, and check if the signature matches with your challenge and the public key of the wallet and the wallet's balance from the public blockchain matches the claim of the auditee. And you can completely automate this without having to involve a third party like a bank.
  - ceejayoz 4y ago
    The likely challenge for the shadier exchanges it the “ok, but what have you used these coins you demonstrably possess as collateral for?” Having $10B in crypto is easy to audit. Finding out $20B is owed is where it gets exciting, FTX-style.
    - xg15 4y ago
      Not to mention, the risks tied to the coins itself. FTX was also fully backed, on paper. The problem was just that their reserves were in their own fantasy money, which lost all of its value the moment FTX got into trouble. (And how the real dollars that people had deposited somehow turned into fantasy money is the magic trick that brought SBF free lodging in the Bahamian jail) So an audit wouldn't just have to prove the assets are there on some chain, it would also have to verify the chain itself is actually suitable as a reserve.
  - blitzar 4y ago
    > require the person that claims to own a wallet to sign a challenge you provide with the public key That takes care of the assets ... now the liabilities

xg15 4y ago

Well, no one is stopping them...