US Senators Elizabeth Warren and Ron Wyden have cited the recent bankruptcies of three large banks to call on the Public Company Accounting Oversight Board to “brake” audits of crypto companies.
In a letter sent on March 21 to the president of the Public Company Accounting Oversight Board, Erica Williams, Warren and Wyden they reiterated his concern about “shady audits” of cryptocurrency companies that both posed in January, this time in reference to the bankruptcies of Silvergate Bank, Silicon Valley Bank and Signature Bank. The two senators asked Williams to answer questions about whether inadequate audits and reserve test reports “may have played a direct or indirect role” in the banks’ collapse.
“You have broad authority to establish standards for auditors that require any SEC-registered auditor to only conduct audits of crypto companies that meet existing standards for audit quality,” the letter said. “Based on the obvious threats to investors and the public interest posed by bogus audits, any audits and reviews of crypto companies conducted by SEC-registered auditors must maintain a high level of scrutiny. If not, these bogus audits must be addressed. by the PCAOB”.
Congress and the Fed weakened stress tests and other rules to prevent big banks from taking on too much risk and crashing the economy—all so banks could make bigger profits. Banks can’t be trusted to regulate themselves. Congress and our regulators need to step up. https://t.co/AVcFr7g3GB
—Elizabeth Warren (@SenWarren) March 21, 2023
Warren and Wyden suggested that bankrupt cryptocurrency exchange FTX, currently in Chapter 11 bankruptcy, might have influenced events around Silvergate and Signature, given that the company “received bogus financial reviews” by auditors registered with the PCAOB:
“In assessing the risks associated with FTX deposits, as well as those of other cryptocurrency-related clients, the banks may have relied on misleading and flawed financial information provided by Proof of Reserves examinations.”
The two senators asked Williams to brief them by March 31 and to respond to questions raised by April 4.
Warren, an outspoken critic of many aspects of the digital asset space in Congress, has been pointing to a lack of regulatory oversight as part of the reason behind the bankruptcy of the aforementioned banks. March 15th, asked Federal Reserve Chairman Jerome Powell to recuse himself of any review of the regulatory rulings that led to the failure of Silicon Valley Bank.
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