After the spectacular demise of FTX, investors and customers are increasingly concerned about the stability of the largest cryptocurrency trading platform, Binance.

The company said Friday that accounting firm Mazars is suspending work with Binance and other crypto industry clients.

Mazars himself did not initially confirm the message.

Winand von Petersdorff-Campen

Economic correspondent in Washington.

  • Follow I follow

The auditors were entrusted with assessing whether the financial reserves were sufficient to cover the debts.

On Wednesday, a Mazars report showed that Bitcoin reserves were even slightly “overcollateralized”: “People can withdraw 100 percent of their assets that they have with Binance.

We never have a problem with that," Binance CEO Changpeng "CZ" Zhao said in an interview with CNBC.

After the collapse of FTX, the world's second-largest crypto trading platform by now-jailed entrepreneur Sam Bankman-Fried, other crypto exchanges sought to allay doubts about their financial strength and liquidity through greater transparency, hiring independent auditors like Mazars.

Values ​​of the leading cryptocurrencies by market cap, bitcoin and ether, fell 2 percent and more than 4 percent, respectively, as the Mazars news broke.

Daily outflows of $250 million

Insecure customers have been withdrawing their cryptocurrencies from the trading platforms for a few weeks.

Binance alone has faced daily outflows averaging $250 million on estimated reserves of $60 billion.

Last Tuesday alone, customers had withdrawn the value of more than a billion dollars.

Their concerns had increased after an unconfirmed report by Reuters news agency last Monday that US prosecutors were investigating Binance on suspicion of aiding money laundering and circumventing US sanctions.

The motives for Mazars' withdrawal, which the media consistently report, are unclear.

Until recently, the "Proof of Reserve" reports were even publicly available.

However, there are also doubts about the validity of such reports.

Francine McKenna, a professor of accounting at the Wharton School, told Coindesk that it was not an official audit and the auditors had no independent insight into bank accounts.

Binance played a role in FTX collapse.

It considered an emergency purchase, but canceled it after a short review, thus sealing the final end of FTX.

The crypto industry is generally coming under pressure as investors seem less inclined to risky assets since the Federal Reserve has been raising interest rates.

Safe bonds meanwhile bring a return of more than 4 percent, for solid corporate bonds almost 6 percent.

Bitcoin has lost nearly two-thirds of its value since March, when the Fed began tightening monetary policy.