- The crypto industry is facing increased scrutiny following FTX’s collapse.
- Bitget Managing Director Gracy Chen has called for establishing industry standards in conversations with DailyCoin.
- Crypto exchanges face hurdles in forging partnerships for greater transparency.
Following the collapse of Sam Bankman-Fried’s crypto empire in November 2022, distrust for centralized crypto exchanges has soared.
With this increased scrutiny, firms have taken new measures to improve transparency and inspire user trust, including third-party audits and regular proof of reserve reports. However, some users have still poked holes at the approach employed by some platforms, as highlighted by Kraken’s Jesse Powell’s famous criticism of Binance’s proof of reserves.
Speaking in an interview with DailyCoin Sections Editor Stefan Trapp, Bitget’s Managing Director Gracy Chen highlighted potential next steps to take transparency in the crypto industry to the next level.
Bitget’s Chen Talks Next Industry Steps for Greater Transparency
Chen argued that centralized crypto exchanges needed to establish auditing standards when asked by DailyCoin’s Stefan about how the crypto industry could enhance transparency.
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"If the major CEXes can work together, and, you know, check on each other or publish POR according to the same standard, then users can, you know … they can do comparison … but right now, it seems that each CEX have their own way of doing proof of reserve, of doing auditing, etc.," she noted.
The executive’s suggestions did not end there, as she also noted that going beyond establishing industry standards, crypto firms needed to build working relationships with the top four auditing firms. According to Chen, such partnerships would help boost the credibility of exchanges beyond native crypto circles, noting that while firms already carry out audits, the top four auditing firms are more likely to spark instant recognition among mass audiences.
"So my parents or my friends who don't work in crypto space or Web3 space, they certainly have heard of Ernst & Young (EY), all these other big four audit firm, but not CertiK. So we really hope to establish that partnership with the bigger firms such as Ernst & Young (EY)," Chen asserted, buttressing how partnerships with leading auditing firms can impact the crypto industry's reach.
While these suggestions are promising, it is worth noting that implementation is not without its hurdles, as conceded by the Bitget managing director, especially with the echoes of the FTX collapse still reverberating through the industry.
The Ghost of FTX Still Haunts the Industry
At its peak, FTX was the second-largest crypto exchange in the world, valued at over $32 billion. At the same time, the exchange’s founder Sam Bankman-Fried was on the fast track to becoming the face of the emerging industry, frequently rubbing shoulders with regulators and politicians in Congress.
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The collapse of the exchange and revelations of fraud have significantly damaged the industry’s reputation, which Chen explains has made the top four auditing firms reluctant to work with crypto firms.
"I, myself, have actually talked to a few partners from some of those [big four] auditing firms. But they said they don't really get to have the ability to do auditing for us because they … don't have the technology capacity. And they don't want to be responsible for any… risks, especially after FTX," Chen revealed.
Chen’s complaints are evidenced by crypto firms’ difficulties in retaining auditors. As reported by DailyCoin in December 2022, Mazars had suspended auditing for its crypto clients, including Binance, KuCoin, and Crypto.com.
On the Flipside
- Clear crypto regulations could help establish and enforce the standards that Bitget’s Gracy Chen suggested.
Why This Matters
Greater transparency among crypto firms would help maintain the trust of existing users and also help propel the mass adoption of blockchain technology.
Read this to learn more about Bitget’s blueprint:
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