The collapse of FTX puts its auditors into the spotlight

The collapse of FTX has moved two US economic test companies into the spotlight, which the cryptocurrency exchange had used to check their books.

ftx claimed that his financial results for Armanino, one of the 20 largest auditing companies in the country in 2021, and Prague Metis, which described himself as the first accounting practice that opened a headquarters in the meta -verses, had been examined.

The two companies belong to several in the USA who have advertised their expertise in the field of digital assets in order to gain business from the growing number of crypto companies, even if the accounting regulations for digital assets are often unclear and are still in its infancy.

ftx founder Sam Bankman-Fried described the examination of his financial results as a milestone last year, but the accounts were not published and the names of the auditors were only known on Friday.

2) Whatever his actual effects may be, if I tap, I will certainly feel old and wise.

- Sbf (@Sbf_ftX) 31. July 2021

The Forbes-Magazin said FTX had "an abundance of information about his business at the beginning of this year, including most companies with which it did business when his last audits took place and details of his official licenses" when the publication of a ranking of cryptocurrency prepared exchange. (FTX was ultimately fifth.)

"Remarkable among the advisors and business partners of FTX were the office of the auditor Prager Metis CPAS, LLC in New Jersey and Armanino, LLP in San Ramon, California, the exams of FTX and FTX.us for the 2021 financial year", announced the magazine on Thursday.

None of the auditing companies answered messages with the request to comment on the scope of their work for FTX or when they had recently given a confirmation note.

ftx was brought down by a rush to customer deposits on his international stock exchange, which followed revelations about the complicated relationships between the stock exchange and other companies in Bankman-Fried's crypto empire. His trading company Alameda Research owed FTX $ 10 billion this week, according to the people familiar with his finances.

Bankman-Fried blamed incorrect accounting for the liquidity and leverage of the stock exchange for the collapse.

The claims of FTX to have checked financial data left numerous questions unanswered, said Jeffrey Johanns, a former PWC partner, the auditing at the University of Texas in Austin, especially in view of the revelations about the complexity of its organizational structure.

"If an auditing company had any kind of assurance, what kind of assurance was it, how extensive it was and how many companies were covered?" said Johanns. "Especially if there are transactions in the group, it would be difficult to check."

Prager Metis, which has more than 100 partners and 600 employees in 24 branches worldwide, says that its customers include private and public companies in industries that range from gastronomy to production.

In a report from August of the Public Company Accounting Oversight Board, the supervisory authority for the American auditor profession, it is said that his inspectors have determined defects in all four tests carried out by Prague Metis. The company informed the PCAOB that it was working on fixing the problems.

The group has a practice for digital assets, which it says, among other things, provides services for crypto exchanges, issuers of non-fungal tokens and crypto hedge funds. It has also tried to provide companies that build the operations in the immersive virtual worlds that are known as a meta verse.

"In the developing digital world there is an enormous need for financial expertise and resources," said Chief Executive Glenn Friedman in January when Prague Metis opened a "headquarters" on the METAVERSE platform Decentraland. The company sponsors an event this weekend at a music festival on the platform.

In a now deleted website contribution from June, which showed employees of Prague Metis and FTX in a baseball game of the Yankees, the company said that it was "proud to support FTX US" and "Looking forward to our next joint adventure".

Armanino has also strongly pushed into the work for digital asset and cryptocurrency companies and contributed to the fact that according to Accounting Today, it became one of the fastest growing US economic audit companies with sales of $ 458 million in the last financial year.

The company has strongly marketed technology with which cryptocurrency exchanges and other companies can prove that digital assets are safe, with real-time verification for customers. A Twitter account from Armanino advertised the product on Tuesday when FTX's conversion of the industry captivated the industry.

Last December, the same account had tweeted to the statement by Bankman-Fried before the Financial Service Committee of the House of Representatives when the FTX founder urged the legislator to standardize and promote crypto control.

"We are working in our names today," wrote the account.