The investor who foresaw the mortgage crisis is wary of so-called proof of reserves.
Such reviews on a firm's digital holdings are meaningless, according to the former hedge fund manager.
Auditors were learning on the job when I started using a new kind of credit default swap. It's not a good thing. The audit is meaningless.
—Cassandra B.C. (@michaeljburry) December 16, 2022
Mazars, the French accounting firm used by Binance and other larger players in the space to produce proof-of-reserves reports, stopped work on Friday.
Proof of reserves is being promoted as a way to assure customers that their assets are secure.
Critics say that proof of reserves doesn't give a complete picture of a company's risks.
Following the collapse of FTX, a $32 billion empire started by Sam Bankman- Fried, there has been a cry for audits.
FTX filed for bankruptcy last month after it was revealed that its native token was being used to support Bankman-Fried's firm. Customer money was lost by the firm.
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