Stock - Bitcoin/ Crpto crash/ cryptocurrency
The crypto exchange also paused withdrawals of a major stablecoin for a period on Monday, blaming delays in the traditional banking system. Image Credit: Shutterstock

Paris: French auditing firm Mazars said on Friday it has paused all work for clients in the crypto business, reflecting a broader sentiment in the global high-finance industry as companies distance themselves from the beleaguered sector.

Paris-based Mazars was hired last month by major crypto exchange Binance to perform a so-called proof-of-reserves check on its bitcoin holdings.

The firm this month found that the exchange’s reserves on a single day in late November were overcollateralized. Mazars later deleted the webpage containing a report, published on December 7, on the check.

“Mazars has paused its activity relating to the provision of Proof of Reserves Reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public,” the company said.

Proof-of-reserves checks are supposed to let users of exchanges confirm their holdings are included in checks of blockchain data, and that the exchange’s reserves match clients’ assets. They are not akin to a full financial audit.

Bloomberg and news outlet CoinDesk reported the story earlier on Friday.

Nearly $2 trillion in value has been wiped out from the crypto sector this year on rising interest rates and exacerbating worries of an economic downturn. The slump has eliminated key industry players such as Voyager Digital, Three Arrows Capital and Celsius Network.

But the bigger blow came after larger crypto exchange FTX filed for bankruptcy protection last month. Its swift fall has also sparked tough regulatory scrutiny of how major exchanges hold user funds.

Binance earlier this week was hit by a surge in outflows, which CEO Changpeng Zhao called “business as usual”.