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So where is Kraken's liabilities audit from a reputable firm? Please no no-name firms.

by senttoschool 4y ago

deleted 4y ago
[deleted]
landoftheice 4y ago
[dead]
DannyBee 4y ago
I'm definitely in the "crypto is silly and a drag on the world" camp, but this is actually not a reasonable request. The big 4 accounting firms have all stated they won't take on more crypto audits. So have like the next 20 :) That is true whether you're trying to do it right or not (IE It is independent of whether you are in the 0.1% of this stuff that is not a scam). It's not reasonable to ask them to do something impossible, and then point out that they can't do it as proof of fraud. That's true even if it's impossible because of worries about fraud :) It's instead reasonable to ask them to do what they can. IE "Prove you aren't fraudulent by getting the big 4 to audit your liabilities" - "The big 4 won't take on more crypto audits due to worry about fraudulent companies and their own reputation" - "See, you are fraudulent!" Does not work as an argument.
- kortilla 4y ago
  They’ve only stated that because it’s not obvious there are any big legit crypto companies. If kraken looked fully above board, the big 4 accounting companies would be willing to take it on as a client.
  - karamanolev 4y ago
    I don't like crypto and I don't fully buy the Kraken audits, but man, are the Big 4 also full of s**. I wouldn't say any legit (if such exists) crypto firm can do anything to be taken on as a client at this point.
    - TheOtherHobbes 4y ago
      Which is ironic because the Big 4 are not known for aggressive auditing. There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality.
      - WrtCdEvrydy 4y ago
        > There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality. I mean, audits should trigger a collapse... I assume once people inside realize the audit passed, they'll be more blatant and likely to blow up their scheme.
  - DannyBee 4y ago
    Sure but it changes nothing, as I said. Assume 99.9% of companies are fraudulent and that’s why they won’t do audits. You can’t say the 0.1% are fraudulent because they can’t get them to break their policy. You can only ask them to do what they can do.
- prepend 4y ago
  Deloitte audits coinbase [0] and e&y audits at least one crypto company. So they haven’t sworn off crypto as an entire industry, they just won’t audit shady firms. And specifically binance has not been able to convince a major firm to audit them. Also, it’s not that these crypto companies aren’t hiring big4, it’s that big4 won’t attest to reserves and other accounting standards. So it’s quite likely that crypto companies are attempting to hire, big4 do due diligence, detect shenanigans and refuse. [0] https://blockworks.co/news/crypto-auditors-call-it-quits https://blockworks.co/news/crypto-auditors-call-it-quits
  - DannyBee 4y ago
    Your last paragraph is basically assumption of guilt. I don’t think you can make the claim that they are just saying no to the shady ones without more data. Especially since they say yes to plenty of shady things It seems a lot more likely to me they were threatened by regulators or scared of what they would do, and created blanket policies about new clients or what they would attest to as a result than “we are doing diligence on tons of crypto firms that want us as clients and just saying no after we discover they are shady”
    - prepend 4y ago
      Why would you assume they have a blanket policy? It’s much more likely that the big4, who have been doing the same thing for 100+ years, just applies their normal system when evaluating new clients- what is their ability to perform the work, what is their risk to the firm. The fact is that they haven’t been audited. Financial regulation is set up so you don’t have to speculate or assume why this doesn’t occur. If it doesn’t occur, that’s bad from a risk mitigation standpoint. Since crypto firms are logical entities that know the benefits of auditing and they have lots of funding and can afford it, it seems more likely that they don’t audit because they have bad books. The threat to accounting firms by regulators is that if they audit incorrectly and attest to incorrect things then they will be shut down.
- MichaelZuo 4y ago
  This is incorrect, Deloitte audited Coinbase just last year.
  - DannyBee 4y ago
    How is that inconsistent with “won’t take on more clients”. Also in the very articles we are discussing you can see the big four were asked by others and said no. If Kraken asked and made public they said no would that satisfy you?
    - MichaelZuo 4y ago
      > won't take on more crypto audits is different from “won’t take on more clients”.
- kjs3 4y ago
  It works perfectly as an argument. If you can't convince the companies who are in the business of auditing to audit you, it's entirely reasonable to think "maybe that points to systemic issues in this business model". And we're talking about firms that are routinely willing to audit and look the other way and sign off on all sorts of obviously shady practices.
seviu 4y ago
Reputable firms will not touch anything related to crypto. They are not allowed to.
- mhluongo 4y ago
  They are and they have. Many stopped after FTX as a policy. Poor risk/reward tradeoffs.
sobkas 4y ago
> So where is Kraken's liabilities audit from a reputable firm? Please no no-name firms. There is no such thing as reputable audit firm. They will do whatever audited firm wants because they want to get paid for more audits.
- senttoschool 4y ago
  Sure, if the firm is willing to put their entire reputation on the line to get more of your business. KPMG, PwC, Deloitte, and E&Y are very unlikely to destroy their reputation for your little business.

So where is Kraken's liabilities audit from a reputable firm? Please no no-name firms.

deleted 4y ago

[deleted]

landoftheice 4y ago

[dead]

DannyBee 4y ago

I'm definitely in the "crypto is silly and a drag on the world" camp, but this is actually not a reasonable request. The big 4 accounting firms have all stated they won't take on more crypto audits. So have like the next 20 :) That is true whether you're trying to do it right or not (IE It is independent of whether you are in the 0.1% of this stuff that is not a scam). It's not reasonable to ask them to do something impossible, and then point out that they can't do it as proof of fraud. That's true even if it's impossible because of worries about fraud :) It's instead reasonable to ask them to do what they can. IE "Prove you aren't fraudulent by getting the big 4 to audit your liabilities" - "The big 4 won't take on more crypto audits due to worry about fraudulent companies and their own reputation" - "See, you are fraudulent!" Does not work as an argument.

kortilla 4y ago
They’ve only stated that because it’s not obvious there are any big legit crypto companies. If kraken looked fully above board, the big 4 accounting companies would be willing to take it on as a client.
- karamanolev 4y ago
  I don't like crypto and I don't fully buy the Kraken audits, but man, are the Big 4 also full of s**. I wouldn't say any legit (if such exists) crypto firm can do anything to be taken on as a client at this point.
  - TheOtherHobbes 4y ago
    Which is ironic because the Big 4 are not known for aggressive auditing. There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality.
    - WrtCdEvrydy 4y ago
      > There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality. I mean, audits should trigger a collapse... I assume once people inside realize the audit passed, they'll be more blatant and likely to blow up their scheme.
- DannyBee 4y ago
  Sure but it changes nothing, as I said. Assume 99.9% of companies are fraudulent and that’s why they won’t do audits. You can’t say the 0.1% are fraudulent because they can’t get them to break their policy. You can only ask them to do what they can do.
prepend 4y ago
Deloitte audits coinbase [0] and e&y audits at least one crypto company. So they haven’t sworn off crypto as an entire industry, they just won’t audit shady firms. And specifically binance has not been able to convince a major firm to audit them. Also, it’s not that these crypto companies aren’t hiring big4, it’s that big4 won’t attest to reserves and other accounting standards. So it’s quite likely that crypto companies are attempting to hire, big4 do due diligence, detect shenanigans and refuse. [0] https://blockworks.co/news/crypto-auditors-call-it-quits https://blockworks.co/news/crypto-auditors-call-it-quits
- DannyBee 4y ago
  Your last paragraph is basically assumption of guilt. I don’t think you can make the claim that they are just saying no to the shady ones without more data. Especially since they say yes to plenty of shady things It seems a lot more likely to me they were threatened by regulators or scared of what they would do, and created blanket policies about new clients or what they would attest to as a result than “we are doing diligence on tons of crypto firms that want us as clients and just saying no after we discover they are shady”
  - prepend 4y ago
    Why would you assume they have a blanket policy? It’s much more likely that the big4, who have been doing the same thing for 100+ years, just applies their normal system when evaluating new clients- what is their ability to perform the work, what is their risk to the firm. The fact is that they haven’t been audited. Financial regulation is set up so you don’t have to speculate or assume why this doesn’t occur. If it doesn’t occur, that’s bad from a risk mitigation standpoint. Since crypto firms are logical entities that know the benefits of auditing and they have lots of funding and can afford it, it seems more likely that they don’t audit because they have bad books. The threat to accounting firms by regulators is that if they audit incorrectly and attest to incorrect things then they will be shut down.
MichaelZuo 4y ago
This is incorrect, Deloitte audited Coinbase just last year.
- DannyBee 4y ago
  How is that inconsistent with “won’t take on more clients”. Also in the very articles we are discussing you can see the big four were asked by others and said no. If Kraken asked and made public they said no would that satisfy you?
  - MichaelZuo 4y ago
    > won't take on more crypto audits is different from “won’t take on more clients”.
kjs3 4y ago
It works perfectly as an argument. If you can't convince the companies who are in the business of auditing to audit you, it's entirely reasonable to think "maybe that points to systemic issues in this business model". And we're talking about firms that are routinely willing to audit and look the other way and sign off on all sorts of obviously shady practices.

seviu 4y ago

Reputable firms will not touch anything related to crypto. They are not allowed to.

mhluongo 4y ago
They are and they have. Many stopped after FTX as a policy. Poor risk/reward tradeoffs.

sobkas 4y ago

> So where is Kraken's liabilities audit from a reputable firm? Please no no-name firms. There is no such thing as reputable audit firm. They will do whatever audited firm wants because they want to get paid for more audits.

senttoschool 4y ago
Sure, if the firm is willing to put their entire reputation on the line to get more of your business. KPMG, PwC, Deloitte, and E&Y are very unlikely to destroy their reputation for your little business.