FTX, Nexo Auditor Armanino To Quit Crypto After 8 Years: Report

Armanino, the auditing firm who spearheaded proof of reserves, is reportedly giving up its crypto clientele amid the FTX scandal.

article-image

Blockworks exclusive art by Axel Rangel modified by Blockworks

share

Armanino, the auditing firm for a string of prominent crypto companies including FTX US, is said to be exiting the space after eight years. 

The California-based auditor will quit crypto and give up its clientele, Forbes reported on Thursday, citing two sources familiar with the matter.

FTX, which frequently endorsed regulation and claimed its financials were audited, hired Armanino to keep its US arm in check, having reportedly performed its 2020 and 2021 audits and found no glaring problems.

A separate accounting firm, Prager Metis, worked on FTX’s flagship global exchange headquartered in The Bahamas.

Armanino began servicing crypto clients in 2014 and had become one of the sector’s most well-known auditors. Crypto exchanges Kraken and Gate.io, as well as lenders Ledn and Nexo, were among its customers alongside FTX US (Nexo first passed Armanino’s “real-time audit” last September).

Armanino had spearheaded crypto exchange “proof of reserves” reports by launching a crypto holdings assurance portal in 2020, which allows users of certain platforms to confirm the status of their digital assets. 

The reports have however faced criticism for relying on company-provided data and absent liabilities.

Mazars, another auditing firm that supported proof of reserves for platforms including Binance and KuCoin, is also pulling out of crypto.

Armanino named in class-action lawsuit with FTX CEO Bankman-Fried

Armanino is yet to address Forbes’ report, but the outlet suggested that its more traditional clients may be concerned about reputational risk in light of the FTX scandal. Blockworks has reached out for comment.

Without naming Prager Metis or Armanino, new FTX CEO John Ray said in a bankruptcy court declaration that FTX’s former audits should not be trusted. 

Ray added FTX’s record-keeping was so careless that advisers “have been unable to prepare a complete list of who worked for the FTX Group as of the petition date.” 

Armanino was also sued in a class-action filed last month with former FTX CEO Sam Bankman-Fried, Prager Matis, as well as FTX insiders Caroline Ellison and Gary Wang. 

Plaintiffs claimed Armanino failed to meet its professional obligation to ensure FTX wasn’t engaged in malpractice. The firm was “wilfully blind” to FTX’s pattern of alleged racketeering, said investor Stephen Pierce, who lost about $20,000 in the exchange.

Reuters reported that FTX had funnelled $10 billion in user funds to Alameda over the years via a secret software “backdoor.” This alleged backdoor allowed the smooth movement of funds without alerting third parties, like auditors.

Updated Dec. 16, 2022 at 2:16 pm ET: Added context, Nexo first passing Armanino’s “real-time audit.”


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

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

morpho 2 graphic.png

Research

Utilizing a ‘DeFi Mullet’ approach, Coinbase’s Bitcoin-backed loans integration with Morpho demonstrates a powerful blueprint for CEXs to monetize dormant assets by expanding adoption of wrapped products (cbBTC, USDC) while also supporting native and/or preferred DeFi ecosystems (Base) which can further lead to downstream growth in onchain liquidity and increased utilization of the related assets.

article-image

With much of the bitcoin mining supply chain based in Asia, US-based operations now face higher equipment prices

article-image

Anticipating an economic downturn, venture firms may be less likely to invest

article-image

Trump’s tariffs may have potentially significant impacts on GDP, household spending and food prices — if they hold

article-image

The Binance-affiliated stablecoin lost about $200M of market capitalization

article-image

How the Bitcoin conversation has evolved since the price was less than $1

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform