👀 Mazars Halts All Work for Crypto Clients

Mazars to Pause All Work for Crypto Clients, Binance Says

Mazars Group, the accounting firm used by crypto giant Binance Holdings Ltd. and other big players in the industry to vouch for their assets held in reserve, has halted all work for crypto clients, dealing a major blow to an industry seeking to shore up confidence in the wake of FTX’s collapse.

The French firm suspended work for cryptocurrency firms because of indications that markets haven’t been reassured by the “proof-of-reserves” reports it had published so far, according to an email from the firm seen by Bloomberg News. The firm was also concerned about intense media scrutiny, the email said.

Shaq on crypto, FTX, post-collapse: ‘I was just a paid spokesperson’

Shaquille O’Neal wants to make one thing clear: He doesn’t believe in crypto, if he ever did.

***

O’Neal has a long history of investing in companies he promotes, including his current enterprise, Shaq’s Fun House, an annual part-festival, part-carnival event. Those investments often pan out: O’Neal makes more off the court than he did as an NBA star, he told HBO’s “Real Sports with Bryant Gumbel” in 2018.

But when it comes to FTX, he says, he was merely a celebrity in an ad.

“A lot of people think I’m involved, but I was just a paid spokesperson for a commercial,” O’Neal says.

Does FTX’s New CEO Have the Worst Job in Corporate America?There was one question that nobody in this week’s congressional hearing asked the new chief executive officer of FTX: Why would anybody want that job?

“I am drawn to crisis,” John J. Ray III told me in an email. “There is something about the sheer chaos and human panic that creates an unbridled energy.”

The same person who became CEO of Enron under similar circumstances of chaos and panic is now a central figure in another generational business scandal because of the market for his talents: Mr. Ray is in high demand when something, somewhere has gone horribly wrong.

A Traditional Exchange? FTX Was Anything But

Cryptocurrency trading platforms like FTX have acquired a sheen of legitimacy in recent years by billing themselves as exchanges — creating an association with staid and trusted financial institutions like the New York Stock Exchange and Nasdaq.

But the implosion of FTX shows just how different crypto exchanges are from their more well known, and highly regulated, counterparts. The latter must abide by strict rules about what they can and cannot do. Crypto exchanges face few such hurdles, especially if they are outside the United States — and most are. They don’t have to disclose how customer money is handled, either to investors or to a regulatory body. Internal financial controls can be scant.

PCAOB Secures Complete Access to Inspect, Investigate Chinese Firms for First Time in HistoryFor the first time in history, the PCAOB has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. And this morning the Board voted to vacate the previous determinations to the contrary.

This historic and unprecedented access was only possible because of the leverage Congress created by passing the Holding Foreign Companies Accountable Act. Congress sent a clear message with that legislation that access to U.S. capital markets is a privilege and not a right, and China received that message loud and clear. Investors are more protected today because of Congress’ leadership, and I want to thank Members of the House and the Senate for their ongoing work to hold China accountable.

I want to be clear: this is the beginning of our work to inspect and investigate firms in China, not the end. The PCAOB is continuing to demand complete access in mainland China and Hong Kong moving forward. Our teams are already making plans to resume regular inspections in early 2023 and beyond, as well as continuing to pursue investigations.

Binance CEO brushes off $2.1 billion FTX clawback concerns

“Would you be able to handle it if somebody asked you for $2.1 billion back,” Quick asked him.

“We are financially OK,” Zhao said, evading a straight answer.

If bankruptcy proceedings can establish that a payment was made through proceedings of fraud or that an individual should have reasonably known that a payment was fraudulent, any beneficiary in a two-year lookback window can have their gains clawed back by the trustee, according to the U.S. bankruptcy code. “Are you prepared to send that money to them?” Sorkin asked Zhao.

“I think we’ll leave that to the lawyers. I think our legal team is perfectly capable of handling it,” Zhao responded before attempting to pivot away to FTX’s well-documented spending habits.

FTX SBF Crypto Victim Card Won’t Be Easy to Play

If the victim card needs to be questioned, it’s not because it would shield Bankman-Fried from the full force of fraud charges, but because it is legally self-serving for those playing it. 3AC is undergoing its own liquidation procedure, and its co-founders are clearly eyeing a chance at redemption. The liquidators’ legal team recently noted that Davies and his fellow co-founder only started blaming FTX after the exchange’s collapse, while cautioning that the co-founders hadn’t been cooperative in meeting creditor claims.

The chances of crypto markets ever progressing beyond speculative booms and busts will be slim to non-existent without more humility, transparency and a stronger anti-fraud mindset from both regulators and participants. This in turn requires a reckoning for all institutions in the sector that today are pitching FTX as an unpredictable one-off in an otherwise healthy market. We are a long way off.

Nikola’s Trevor Milton Seeks New Trial, Saying Juror Lied to Be Chosen

 Nikola Corp. founder Trevor Milton asked for a new trial on charges he misled investors about the electric truck maker’s prospects, arguing the jury convicted him due to bad instructions from the judge and because one juror lied to get on the panel.

Milton was found guilty in October of securities and wire fraud following a monthlong trial, a remarkable downfall for the door-to-door salesman turned billionaire who promised to revolutionize the auto industry. In court filings late Wednesday, his lawyers argued the jurors mistakenly believed that to convict their client of three of the four counts against him, they weren’t required to find that he intended to deceive investors, when in fact they were.

***

Milton also said one juror lied to get on the panel, denying during questioning that she held a negative view of wealthy corporate executives and saying she didn’t use social media, getting her news only from YouTube. In reality, Milton says, the juror is an avid user of Facebook and Twitter whose posts are “riddled with attacks on wealthy executives” and “show a close engagement with the news and current events.”

New York Financial Regulator Issues Crypto Guidance for Banks

New York’s financial regulator said banks looking to enter the cryptocurrency space need to first seek approval from the regulator.

The New York Department of Financial Services, in a guidance document published Thursday, said it would assess new crypto-related activities proposed by financial institutions based on potential risks they may pose to the banks and consumers, and detailed the process for those entities hoping to get approval to offer crypto products and services.

U.S. banks and foreign banks with branches in New York that are under NYDFS supervision should notify the agency at least 90 days before starting any new or significantly different crypto-related activities, according to the guidance.