Summary:
Accountancy group BDO found no issues with FTX’s acquisition of Digital Assets AG (DAAG), despite recent lawsuits claiming misconduct. FTX Trading, under bankruptcy veteran John Ray, has filed multiple lawsuits alleging that funds were distributed recklessly under alleged fraudster Sam Bankman-Fried’s control. FTX Trading specifically sued insiders at the collapsed crypto exchange’s European unit, claiming that Bankman-Fried overpaid due to close ties with DAAG executives. However, BDO’s report suggests that the deal was fair and conducted by unrelated parties. FTX Trading maintains that the purchase was fraudulent and seeks to recover over $320 million. The lack of due diligence in the crypto sector has raised concerns, leading to auditors withdrawing from the space.
Key Points:
– BDO’s report on FTX’s acquisition of DAAG deemed the deal fair and conducted by unrelated parties.
– FTX Trading, under new management, has filed lawsuits alleging reckless distribution of funds under Bankman-Fried’s control.
– FTX Trading claims that Bankman-Fried overpaid for the European unit due to his ties with DAAG executives.
– FTX Trading seeks to recover over $320 million and argues that the purchase was fraudulent.
– Auditors are increasingly reluctant to operate in the crypto sector, following the collapse of FTX and other startups.
Auditors flee crypto:
The collapse of FTX and other heavily hyped startups has drawn attention to the lack of due diligence performed by investors and acquirers in the crypto sector. Investors like Sequoia Capital and Temasek had to write off millions of dollars invested in FTX. Auditors are now more cautious about operating in the space. BDO, which previously audited Tether, reconsidered its work for crypto companies after Bankman-Fried’s empire collapsed. French auditing firm Mazars paused all work with crypto clients, and accounting firm Armanino closed its crypto audit practice. The lack of auditors highlights the need for thorough due diligence in the tech sector.
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