According to Bloomberg’s analysis there are many crucial areas in which cryptocurrency companies fail if they want to be successful . Their research seems to impact the industry as people started to question these companies’ reliability . According to the findings many businesses ignore established rules and lack the necessary governance to avoid another disaster.
Bloomberg’s Analysis Revealed Several Shocking Truths
Sixty cryptocurrency companies that satisfied one or more of the following criteria were the subject of the investigation: they are publicly listed, have raised private equity funding of more than $1 billion or have substantial influence in their sector as of January 2023 .
Between January and May of 2023 Bloomberg requested the same set of inquiries and made several requests for participation or confirmation of public information from each company. Silvergate’s statistics were also taken just before the bank shuts .
The absence of plaques is one of the most worrying findings . It is reported that just 63% of crypto firms having an independent board of directors (defined as having at least one non-executive member) according to a research released on May 15th. The fact that FTX only began instituting a board in its last days is one of the most shocking disclosures . In November 2022 the board was already so small that it was dangerously near to collapsing .
Large cryptocurrency companies must have an independent board of directors to ensure objectivity in decision making . Bloomberg’s research shows that cryptocurrency firms typically lack the will to stay up with industry standards without regulation .
Most of the Cryptocurrency Companies Fail in Audits
According to the results, half of the businesses in the sample utilize an independent auditor from a third party. A cause for concern in a sector that has been emphasizing the need of openness in 2023.
Many local cryptocurrency companies have complained about a lack of qualified auditors nevertheless. This is often the result of previous problems and a general lack of blockchain literacy .
Independent audits and impartial counsel are standard requirements for high net-worth investors. Yet, many local companies cannot or will not access reliable audit services.
After collaborating with Binance and Crypto.com Paris-based Mazars apparently cut ties with the cryptocurrency business in December . The corporation stated its concerns regarding how the public understands these reports. CZ, the CEO of Binance has come under fire for claiming that the company’s AUP with Mazars is a valid one.
The AUP report on Binance’s reservations was withdrawn from Mazars’ website a few weeks later . Both Crypto.com and Binance have since brought on new auditors without giving names.
