Senator Warren calls out “sham audits” while SVB threatens crypto bankruptcy
US Senators Elizabeth Warren and Ron Wyden called on the Public Company Accounting Oversight Board (PCAOB) to hold auditors accountable for failed crypto projects.
The PCAOB—a non-profit that oversees audits of public companies and other issuers—recently stated that proof-of-reserves (PORs) are not equivalent to audits and are not conducted in accordance with PCAOB auditing standards. POR is a method widely used by crypto exchanges to verify the availability of users’ funds. Sen. However, Warren called for stricter oversight:
“But let’s be clear: there is more PCAOB that needs to be done so that consumers are not left in the bag when shady crypto firms collapse.”
The crypto community contrasted her statement as many members highlighted the ongoing collapse of Silicon Valley Bank (SVB), a Federal Deposit Insurance Corporation-insured bank.
On the other hand, when SVB single-handedly contributed to the price instability of the Circle-issued USD Coin (USDC) token, Crypto Twitter questioned Warren’s stance on the collapse of a non-crypto-related bank.
In response to Senator Warren, Ari Paul, the founder of blockchain investment firm Blocktower Capital, highlighted how the SVB is pushing crypto companies into bankruptcy, stating:
“The far larger non-crypto bank SVB forced many good companies to go bankrupt. Stop pretending that your empire-building is helping people… this is just creating unnecessary losses for both retail and institutional depositors.”
Tesla CEO Elon Musk shared a meme for the occasion, showcasing investors’ dilemma when it comes to trusting traditional banks and crypto companies with their money.
As previously reported by Cointelegraph, the investor advisory from the PCAOB’s Office of the Investor Advocate reminded users not to rely solely on POR reports as a way to verify the existence of funds.
“When are you going to apologize for starting the Silvergate bank run and throwing the nation’s banks into chaos?” asked an investor responding to Senator Warren.
Related: Binance upgrades verification of reserves to include zk-SNARKs
On March 11, Circle revealed that $3.3 billion was stuck in Silicon Valley Bank after a March 9 transfer request failed to go through.
In addition to Circle’s statement, the firm’s chief strategy officer and head of global policy emphasized that “Circle is currently protecting the USDC against a black swan failure of the US banking system,” as it called for a bailout from the Federal Deposit Insurance Corporation (FDIC). ).
At the time of writing, $3.3 billion of the roughly $40 billion (8.24%) of USDC reserves remain with SVB.
