United States Senator Warren Urges Action Against "Sham" Cryptocurrency Audits

In a March 21st letter addressed to Public Company Accounting Oversight Board (PCAOB) chair Erica Y. Williams, Senators Elizabeth Warren and Ron Wyden urged the US auditing watchdog to crack down on “sham audits” of crypto companies.

In the letter, senators claimed that misleading audits contributed to the recent turmoil in the US banking sector, which saw three major crypto-friendly banks fall. Silvergate Bank, Silicon Valley Bank, and Signature Bank all collapsed in a span of less than one week.

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In its letter, US Senators Elizabeth Warren and Ron Wyden noted:

One particular concern is the role that shady audits play in giving crypto firms a veneer of safety and financial stability.

It appears that Erica Williams received a similar letter in February. At that time, Wiliams acknowledged the concerns of Warren and Wyden by stating:

I share your concern that when PCAOB-registered auditors perform “sham audits” – even for entities whose audits generally fall outside of our jurisdiction – there are risks to investors and the PCAOB.

However, the PCAOB executive claimed that the institution faces "statutory limits when it comes to regulating the audits of certain cryptocurrency companies."

Senators Warren and Wyden have argued that the board has the authority and responsibility to “protect the integrity of the auditing system for SEC-registered brokers, dealers, and issuers,” citing Sarbanes-Oxley Act.

And given that the ongoing use of sham audits of crypto firms conducted by PCAOB-registered auditors mislead the public and threatens the integrity of that auditing system – and we now know, potentially the banking and financial systems – you have both the authority and responsibility to rein them in.

Warren is a member of the Senate Banking Committee tasked with overseeing the SEC activities. The committee is set to also play a critical role in the development of the crypto regulatory framework.

It is not the first time Warren raised various crypto-related concerns. At the beginning of the year, the US senator urged Securities and Exchange Commission to "double down" on its crypto regulatory efforts.