United States Senators Elizabeth Warren and Ron Wyden asked the Public Company Accounting Oversight Board (PCAOB) to hold auditors accountable for failed crypto projects.
The PCAOB — a non-profit overseeing the audits of public companies and other issuers — recently stated that proof-of-reserves (POR) are not equivalent to audits and are not conducted in accordance with PCAOB auditing standards. POR is a method widely adopted by crypto exchanges to confirm the availability of users’ funds. However, Sen. Warren demanded stricter oversight:
“But let’s be clear: there’s more PCAOB needs to do so consumers aren’t left holding the bag when shady crypto firms collapse.”
The crypto community contrasted her statement as numerous members highlighted the ongoing collapse of Silicon Valley Bank (SVB), a Federal Deposit Insurance Corporation-insured bank.
But let’s be clear: there’s more PCAOB needs to do so consumers aren’t left holding the bag when shady crypto firms collapse. https://t.co/cRJxwL2gBL
— Elizabeth Warren (@SenWarren) March 10, 2023
On the other hand, with SVB single-handedly contributing to the price instability of the Circle-issued USD Coin (USDC) token, Crypto Twitter questioned Warren’s stance around the collapse of a non-crypto-related bank.
Responding to Sen. Warren, Ari Paul, the founder of blockchain investment firm Blocktower Capital, highlighted how SVB is pushing crypto companies into bankruptcy, stating:
“The far larger non-crypto bank SVB just forced a lot of good companies into bankruptcy. Stop pretending your empire building helps people…this just keeps delivering unnecessary losses for both retail and institutional depositors.”
Tesla CEO Elon Musk shared a meme for the occasion, showcasing the dilemma of investors when it comes to trusting traditional banks and crypto businesses with their money.
— Elon Musk (@elonmusk) March 11, 2023
As previously reported by Cointelegraph, the investor advisory from the PCAOB’s Office of the Investor Advocate reminded users to not solely rely on POR reports as a way to confirm the existence of funds.
“When are you going to apologize for starting the Silvergate bank run and plunging the nation’s banks into chaos?” asked an investor responding to Sen. Warren.
Related: Binance upgrades proof-of-reserves verification to include zk-SNARKs
On March 11, Circle revealed that $3.3 billion was stuck with Silicon Valley Bank after a transfer request from March 9 did not go through.
1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.
— Circle (@circle) March 11, 2023
Adding to Circle’s statement, the firm’s chief strategy officer and head of global policy emphasized that “Circle is currently protecting USDC from a black swan failure in the U.S. banking system,” as he called for a rescue plan 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.