Crypto bankruptcies generated a wave of new accounting clients for Armanino

ByDonald L. Leech

Oct 12, 2022

Although bad news for the companies involved, bankruptcies, liquidations and zero tokens have created myriad opportunities for accounting firms like Armanino.

The company, founded in 1969, began considering providing services to crypto businesses in 2014 and has since developed a full range of products under its TrustExporer brand.

“What happened over the summer was very much like what we expected and were trying to tell people about,” said Clayton Lowery, a senior blockchain official. Decrypt at the Chainlink SmartCon event in New York. “It took a few years and unfortunately a few bad things happened. But that’s really what we see. We see so many people coming in.

He added that the enthusiasm for stablecoins, initially dulled by the algorithmic stablecoin TerraUSD wipes out $40 billion in May, seems to be back.

“Traditional finance is really starting to take an interest [stablecoins] as banks,” Lowery said. “Even community banks across the country are considering issuing their own stablecoin, right up to the biggest banks.

Lowery said he’s also “starting to see a lot more internationally, in Europe and in England”.

Today, the firm counts a few big names in crypto among its clients. Armanino was Coinbase’s auditor before the crypto exchange moved to Deloitte. The company also piloted what is now its proof-of-reserves software as a dashboard for stablecoin issuer TrueUSD.

CoinShares, which manages more than $2 billion in assets to date, has used Armanino’s real-time attestation software for its exchange-traded products since 2020.

Attestations verify a company’s account balances. For stablecoin issuers, this number is then compared to the number of tokens issued. And for lenders, like Nexoit is compared to a company’s liabilities.

Lowery said one of the unofficial roles he and Armanino’s crypto team play has become educating customers on the difference between an audit and an attestation.

“There is a big difference between the term audit and attest. Everybody uses ‘audit’, and it’s kind of become a standard with smart contract auditing on the code side,” Lowery said. “And so everyone throws ‘audit’.”

Simply put, an audit provides a much deeper look at a company’s finances. A certificate, on the other hand, is a report produced by an independent firm according to a procedure provided by the client.

Many big crypto companies have stopped using the word “audit” for things that aren’t audits. Even so, stablecoin issuers Circle and Tether, the two largest by very wide margins, still differ in the terms they use for their reserve reports.

In his August report, accounting firm Grant Thornton said Circle’s “statement” of its reservations was “accurately stated”. Attached last reserve reportBDO Italia’s first since the company ditched MHA Cayman, says the accounting firm found Tether’s statement on its reserves “fairly presented.”

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