Crypto auditors risk suspension over misleading claims: SEC chief accountant

Accounting firms acting as crypto ‘auditors’ are warned to disassociate with clients if they spot misleading statements — or tell the SEC

article-image

Tada Images/Shutterstock modified by Blockworks

share

Accounting firms engaging with the crypto industry as ‘auditors’ must pay close attention to antifraud regulations or face censure or suspension, the SEC chief accountant warned.

Paul Munter, the principal SEC advisor on accounting and auditing, said crypto companies could be misleadingly claiming their “purported audits” are analogous — and even more accurate — than traditional finance audits.

“Such suggestions are false,” he wrote in a statement on Thursday. “Non-audit arrangements are neither as rigorous nor as comprehensive as a financial statement audit, and may not provide any reasonable assurance to investors.”

Many crypto companies, including exchanges and lending platforms, pushed to release what they call “proof of reserve” reports following the collapse of FTX. Stablecoin issuers commonly rely on attestations from third parties about their tokens’ backing.

Munter cautioned that accounting firms, even those new to serving crypto clients, need to be mindful of various responsibilities and risks. Misrepresentations could potentially lead to legal complications for the firm, he said.

If an accounting firm becomes aware that its clients have made misleading statements about the nature of their non-audit work to the public, it “should consider making a noisy withdrawal, disassociating itself from the client, including by way of its own public statements, or, if that is not sufficient, informing the Commission,” he said.

Read more: Are Exchanges Falling Short on Proof of Reserves Efforts?

Crypto auditors in flux

The SEC’s cautionary message comes a few months after the top US audit watchdog, the Public Company Accounting Oversight Board (PCAOB), stated that proof of reserves reports cannot be entirely relied upon to prove solvency.

The PCAOB emphasized that such reports are not audits, and therefore, do not offer substantial assurance to investors or the public.

Binance, along with other crypto companies, enlisted financial audit firm Mazars to provide proof of reserves after the FTX crash. 

Nevertheless, Mazars and another prominent proof-of-reserves auditor, Armanino, terminated their services for crypto clients in December. 

Mazars reportedly withdrew from crypto-related work due to apprehensions about how the public perceives these reports.

Armanino was implicated in a class-action lawsuit late last year, for allegedly failing to detect irregularities at FTX.US despite conducting the exchange’s audit in 2021.

Armanino’s accounting team moved on to set up a new crypto-friendly operation, The Network Firm, earlier this year.

Another crypto-focused accounting firm, Node40, recently told Blockworks that it’s now diversifying beyond its primary focus, exploring wider compliance services.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Pipe Network is a decentralized content delivery network (dCDN) that replaces the sparse, capital intensive data center footprint of traditional CDNs with a permissionless mesh of independent node operators. By orchestrating under-utilized resources that already exist at the edge, rather than purchasing or leasing thousands of servers, Pipe slashes capital intensity while letting supply expand autonomously in the places where bandwidth is scarcest and most expensive.

article-image

ETH’s “breakout marks a significant structural shift and clears the path towards…$4,000,” Kraken’s OTC desk noted

article-image

Fiscal dominance isn’t about interest rates and it isn’t about Trump, either

article-image

Firestarter Storage brings decentralized storage and delivery to Solana

article-image

After lengthy closing arguments on Wednesday, the case is now in the hands of 12 jurors

article-image

Analysts cite weak trading volume and regulatory progress as factors

article-image

Builders weigh in on Ethereum’s first decade and the decisions that will define its next one