US watchdog should step up oversight of crypto auditors, Democratic senators say Reuters

© Reuters. FILE PHOTO: Cryptocurrencies are shown in this illustration taken on January 24, 2022. REUTERS/Dado Ruvic/Illustration

By Hannah Lang and Douglas Gillison

(Reuters) – U.S. Democratic senators Elizabeth Warren and Ron Wyden are calling on the state’s accounting body to increase oversight of firms that audit cryptocurrency firms following the collapse of crypto exchange FTX.

In a letter to the U.S. Public Company Accounting Oversight Board (PCAOB) published Thursday, Warren and Wyden questioned the agency, which oversees registered public accounting firms worldwide, why audit firms working with FTX failed to identify corporate mismanagement and a lack of internal controls that federal prosecutors cited.

“When PCAOB-registered auditors conduct fraudulent audits—even for companies that may lie outside the PCAOB’s jurisdiction—they tarnish the PCAOB’s credibility,” Warren and Wyden wrote.

A PCAOB spokesman confirmed the board had received the letter and said it would respond directly to lawmakers.

“We look forward to working with them on our shared goal of investor protection,” the spokesperson said.

US prosecutors in Manhattan have accused FTX founder and former CEO Sam Bankman-Fried of stealing billions of dollars in client funds to cover losses at his Alameda Research hedge fund. Bankman-Fried previously admitted to failings in risk management at FTX, but said he did not believe he was criminally liable.

Before its collapse and subsequent bankruptcy in November, FTX said it had been audited by PCAOB-registered firms Armanino and Prager Metis. Representatives for Armanino and Prager Metis did not immediately respond to requests for comment.

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